* China says downturn deepens, Q4 growth seen at 3-year low
* Bleak sentiment prompts call for big ECB rate cut
* ArcelorMittal to cut 9,000 jobs
* Shares rise in Europe; U.S. market shut for Thanksgiving
By Keith Weir
LONDON, Nov 27 (Reuters) - China warned on Thursday that its economic downturn could threaten stability as pressure grew on the European Central Bank to make a big cut in interest rates to help contain the global financial crisis.
In India, emerging Asia's other economic titan, financial markets were closed after Islamist militants killed more than 100 people in the commercial capital, Mumbai.
Violence in India and political unrest in Thailand highlighted political risk as another potential threat to emerging markets battered by the global crisis.
A crisis that began last year with the collapse of the U.S. housing market has spread around the world, bringing several financial institutions to their knees and pushing the United States, Japan and Europe into recession or to the brink of it.
Unemployment is rising in many countries. ArcelorMittal, the world's largest steelmaker, said it would cut up to 9,000 more jobs, saving $1 billion a year.
In France, the number of job seekers rose past the 2 million mark, as the economic crisis took its toll on employment.
CASE FOR MORE RATE CUTS
Central banks around the globe have slashed interest rates to try to ease the flow of credit and restart stalled economies.
Economic sentiment in Europe's single currency zone hit 15-year lows in November and inflation expectations plunged, boosting the case for a big rate cut from the European Central Bank next week.
"The euro zone is in a deep recession, upping the pressure on the ECB to cut interest rates further," said Christoph Weil, economist at Commerzbank. "We envisage a first move next week on a scale of 75 basis points to 2.5 percent."
European governments disagreed on funding for measure to stimulate growth in the European Union, with German rejecting French calls for Berlin to provide billions more euros, and the Irish government saying it has no room for any further fiscal stimulus as it works to slice its deficit.
The Bank of England is also expected to cut rates by 50 basis points or more on Dec. 4, a Reuters poll showed.
Benchmark rates are 3.25 percent in the eurozone and 3.0 percent in Britain, against 1.0 percent in the United States.
China's central bank cut interest rates by the biggest margin in 11 years on Wednesday in response to a crisis that is reining in its once runaway growth, bringing worries about social unrest as jobs disappear.
China's State Information Center forecast annual growth would slow to 8 percent this quarter from 9 percent in the third quarter, a cooling from double-digit rates recorded in the past five years.
The country's top economic planner said the financial crisis was still spreading and its impact was deepening in China.
"Excessive bankruptcies and production cuts will lead to massive unemployment and stir social unrest," Zhang Ping, chairman of the National Development and Reform Commission, told a news conference.
REDUCING JOBS, WORKING HOURS
ArcelorMittal said it would launch a voluntary redundancy scheme for largely white-collar staff to make its job cuts, which could affect about 3 percent of its workforce.
Germany's Daimler AG plans to talk to labor groups about reducing working hours at four German Mercedes-Benz auto assembly plants from January until the end of April.
Should this step be implemented, at least 47,000 employees could have shortened work weeks, for which the German government would compensate wage shortfalls.
General Motors Corp aims to cut staff costs at its European operations by at least 10 percent, in part by reducing the number of hours employees work.
The number of German unemployed fell in November to its lowest level since 1992, but officials said a labor market boom was fading as recession hits Europe's biggest economy.
In Britain, retailer Woolworths put its variety stores business into administration, jeopardizing thousands of jobs.
European equities rose 2.6 percent, buoyed by sharp gains in Asia and the United States, but the grim economic reports pushed government bond yields in Europe to a three-year low.
However hedge funds remained under great strain. BlueBay Asset Management closed its long-short emerging market fund after losing about $600 million.
Demonstrating growing concern about the scale of U.S. government programs to boost the economy and guarantee financial assets, the risk premium on U.S. Treasury credit default swaps, essentially the price investors pay to insure against the U.S. government defaulting on its debt, hit record highs.
U.S. markets were closed for the Thanksgiving Day holiday, but some retailers were breaking with tradition and opening to try to boost sales.
"Black Friday" -- the day after Thanksgiving -- normally marks the start of the U.S. shopping season in the run-up to Christmas. Its name comes from marking the point when retailers could move into profit for the year.
The sluggish global economy took a toll on large projects, as Royal Dutch Shell Plc delayed another Canadian oil sands project, Brazilian steelmaker Gerdau postponed a $524 million investment in a new plant in Argentina, and mining company BHP Billiton delayed plans to build a $120 million plant in Chile. (Writing by Phil Wahba; reporting by Reuters bureaux worldwide; editing by Philippa Fletcher and Chris Wilson)