* Australia unveils second stimulus package, cuts rates
* Bank of Japan to buy shares held by banks
* U.S. Senate considering $900 billion stimulus
* IMF sees Asian economies recovering in 2010
By Rob Taylor and Leika Kihara
CANBERRA/TOKYO, Feb 3 (Reuters) - Australia unveiled a $26 billion second stimulus plan on Tuesday aimed at staving off a recession already engulfing much of the rich world, and the Bank of Japan said it would buy up to $11 billion of shares held by banks.
The U.S. Senate was due to begin a series of votes on a $900 billion package of tax cuts and spending that President Barack Obama says will help fight the worst economic crisis since the Great Depression.
Stock investors welcomed the signals from Tokyo and Canberra that governments were prepared to take increasingly aggressive action to stabilise markets and revive their economies, pushing Asian shares higher while the yen slipped against the dollar and euro as risk aversion eased.
"It's much bigger than most people expected," said Macquarie Bank senior economist Brian Redican of the Australian stimulus.
"That's a good thing as there's no point trying to defend the budget by sitting by and letting the economy slide into recession."
With the United States, Japan, Britain and Europe all officially in recession, surveys on Monday showed a worldwide manufacturing slump eased in January, but other data painted a picture of a painful global downturn still in full swing.
In particular, the outlook for U.S. consumer spending, which accounts for two-thirds of the world's biggest economy, remained weak. Spending rose just 3.6 percent in 2008 as a whole, the smallest increase since 1961.
CHINA GROWTH TARGET "CHALLENGING"
Flagging U.S. spending has hurt many Asian economies, which have been hit by a double whammy of collapsing exports and flagging demand at home, but the International Monetary Fund on Tuesday held out some hope of recovery in 2010.
But Asia's export-driven economies would need to boost domestic demand, which would not happen overnight, warned IMF Managing Director Dominique Strauss-Kahn in a webcast to reporters from Washington.
"It's impossible for Asia to have a recovery while the rest of the world is in bad shape," he said.
Asian economies were likely to grow at an average rate of more than 5 percent next year with some economies well positioned to pick up once the external environment improves, he added.
China, Asia's second-biggest economy after Japan, could still hit the government's target for 8 percent growth in gross domestic product this year but to achieve this goal would be a big challenge, Strauss-Kahn said, adding that China was of "tremendous importance" to the world economy.
China, the engine of world growth in recent years, has witnessed a sharp downturn in recent months. On Monday a senior official said 20 million rural migrants had lost their jobs, stoking the Communist Party's perennial fears of social unrest.
Job losses have also been severe in the United States, where another employment report due out on Friday was expected to show an additional half-million positions were cut.
On Monday alone, department store operator Macy's Inc said it would slash about 7,000 jobs, about 4 percent of its workforce, and the Wall Street Journal reported Morgan Stanley would cut 3-4 percent of its workforce, or 1,500-1,800 jobs.
FORECAST CUT
Australia said it would spend A$42 billion on infrastructure, schools and housing, as well as cash payments to low and middle-income earners, and halved its 2008/09 growth forecast to 1 percent.
"This plan today, as part of a broad strategy on which we embarked last year, provides a basis to see Australia through this economic crisis," said Prime Minister Kevin Rudd.
Later, as had been widely expected, the Reserve Bank of Australia cut its benchmark interest rate by 100 basis points to a record low 3.25 percent.
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In Japan, the central bank said it would buy up to 1 trillion yen worth of shares held by banks in a move analysts said was aimed at easing the burden on financial institutions balance sheets.
"Banks' exposure to the stock market is excessive relative to their capital base and hence any such purchases will be welcomed," said Jason Rogers, a credit analyst at Barclays Capital in Singapore.
Underlining the need for action, the Sankei newspaper said Mitsubishi UFJ Financial Group, Japan's biggest bank, would post a loss for the April-December period and slash its annual forecasts, hit by stock losses and a rise in bad loans.
And the Yomiuri newspaper said smaller rival Shinsei Bank would cut its forecast for the year to March from a profit to a loss of several tens of billions of yen, setting the stage for a capital boost and shift in strategy. (Additional reporting by Wayne Cole and Michael Perry in Sydney, Hideyuki Sano and Leika Kihara in Tokyo and Kevin Yao in Singapore; Writing by Alex Richardson; Editing by Tomasz Janowski)