* Japan, Germany to launch economic packages
* More central banks to follow Fed and cut rates
* Russian reserves fall
* Asian stock markets rally, Europe firm
* Taiwan, Hong Kong follow Fed in cutting interest rates
By Elizabeth Piper
LONDON, Oct 30 (Reuters) - Japan and Germany said on Thursday they would plough billions of dollars into their economies, hoping to provide a cushion against a deep recession and complement a series of expected interest rates cuts.
Japan, the world's second biggest economy, unveiled a 5 trillion yen ($51 billion) package of spending measures to support its economy and Germany planned a range of steps worth up to 25 billion euros ($32 billion) to boost business.
"I will implement bold policies so people who are confronting pain will feel the real effect," Japanese Prime Minister Taro Aso wrote in his weekly email magazine published on Thursday. "Drawing on all possible wisdom, we must overcome this 'once in 100 years' crisis."
A leading member of Germany's ruling Social Democrats (SPD) told a newspaper that the government planned to introduce a range of steps to bolster the economy next week.
"All together we are talking about a volume of perhaps 20 billion euros to 25 billion euros," Peter Struck, parliamentary floor leader of the SPD, which shares power with Chancellor Angela Merkel's conservatives, told the Berliner Zeitung.
The package will include support for car makers and building renovation as well as tax breaks enabling companies to write off a share of their investments, German newspapers reported.
RATE CUTS
Growing fears that the world is slipping into a downturn has forced authorities to use any means to protect their economies.
Russia's gold and foreign exchange reserves fell below the $500 billion mark for the first time in eight months, suggesting Kremlin cash is start to flow into the economy.
On Wednesday, Russia's richest man, Oleg Deripaska, became the first beneficiary of a rescue plan, when his flagship company secured a $4.5 billion loan needed to keep its stake in metals producer, Norilsk Nickel. Four more of the world's top central banks are forecast to have reduced interest rates by the end of next week.
Japan was expected, on Friday, to follow the United States and China and cut rates, with the European Central Bank, Britain and Australia doing the same next week. Hungary, Taiwan, Hong Kong, Norway and a number of Gulf states have already done so.
The United States cut interest rates to 1 percent on Wednesday to try to kickstart its economy.
U.S. data later on Thursday is expected to show that the economy shrank in the July-to-September quarter.
The rate cuts and a U.S. move to offer funds to Brazil, Mexico, South Korea and Singapore via four new currency swap lines worth $30 billion spurred Asian markets.
Japan's benchmark Nikkei average index closed up 10 percent, a third straight day of gains. European shares firmed modestly.
The new swap lines boosted South Korea's markets, which have been hurt by fears that banks and companies would be unable to get their hands on enough dollars to meet maturing debts.
"With this deal, Korea secured a 'safe dollar supplier' in the Fed and that will ease concerns over a dollar liquidity shortage," said June Park, an economist at Woori Investment & Securities.
POLICY RESPONSE
Governments have pledged about $4 trillion to support banks and restart money markets to try to stem the crisis set off by the bursting of a U.S. housing market bubble.
But many are looking at taking further measures to protect their economies against recession.
Turkey said it was continuing talks with the International Monetary Fund at a technical level on a possible precautionary stand-by agreement.
The IMF approved an emergency short-term liquidity facility for emerging market economies so they can tap cash to help them weather the credit crisis.
U.S. regulators are finalising a new federal programme to provide up to $600 billion in government guarantees of home mortgages to help prevent foreclosures, a source familiar with the talks said. The plan could be announced as soon as Thursday.
Britain indicated it may lift self-imposed limits on government borrowing to counter a recession, while South Korean President Lee Myung-bak said his government would bring forward budget spending and consider ramping up construction spending.
Still, poor corporate earnings suggested the economic impact of the financial crisis is only starting to show.
European companies suggested next year would be painful.
Britain's WPP Group, the world's second-largest advertising firm, said 2009 would be very tough after reporting third-quarter figures in line with expectations.
South Korea's Hynix Semiconductor, the world's No. 2 memory chip maker, reported its worst quarterly net loss in nearly 8 years, saying the future looks grim.
Two of the largest U.S. auto parts makers, BorgWarner Inc and Tenneco Inc, said the economic crisis would mean more job cuts and plant closings.
General Motors Corp, which said global auto sales dropped about 7 percent in the third quarter, has asked the U.S. government for some $10 billion to support a merger with smaller rival Chrysler, sources said. (Reporting by Reuters bureaus worldwide; Editing by Mike Peacock)