* Exports to U.S. fall by a third on auto slump
* Shipments to Asia drop by a quarter; China wilts
* Government grows more pessimistic on economy
* Reuters poll show weakest manufacturing sentiment on record
* Slump may push central bank toward zero rates, analysts say (For more stories on the financial crisis click)
By Leika Kihara
TOKYO, Dec 22 (Reuters) - Japan logged a trade deficit for the longest period in nearly 30 years in November as a global economic slump and a surging yen led to a record fall in exports, tearing into earnings at big companies such as Toyota.
With shipments to the United States and China wilting, the mood among Japan's export-reliant manufacturers hit an all-time low and deteriorated at the fastest pace on record in December, a Reuters poll showed on Monday.
Underscoring the deepening gloom, Toyota Motor Corp, the world's biggest automaker, on Monday forecast its first ever group operating loss due to a relentless global slide in car sales and a crippling rise in the yen.
"Exports will probably be weak at least until the end of this fiscal year," said Maiko Noguchi, senior economist at Daiwa Securities SMBC.
"After that, there will be some help from fiscal spending (by other countries) but it's still not clear the economy could recover sustainably."
A record 26.7 percent plunge in exports, bigger than a 14.4 percent fall in imports, pushed Japan's once politically sensitive trade balance into a deficit of 223.4 billion yen ($2.48 billion) in November.
That was smaller than a median market forecast of 257.5 billion yen but the second straight month in the red.
Japan last recorded a trade deficit for two months in a row in 1980, when it was locked in a trade dispute with the United States and its currency appreciated to 200 yen to the dollar from more than 300 yen in the 1970s.
The Bank of Japan cut interest rates to 0.1 percent last week. Mounting trouble in the world's second-largest economy has strengthened expectations that the BOJ might return to a quantitative easing policy of flooding markets with excess cash dropped just two years ago, a Reuters poll showed.
BOJ Governor Masaaki Shirakawa said on Monday that with Japanese rates already low, the key issue for monetary policy would be how to facilitate corporate funding by making money more easily available at a lower cost.
"The world economy is in a very severe condition it has not experienced for a long time, I'd even say, a crisis. Extinguishing the fire from the crisis is our priority for now and we are doing all we can," Shirakawa said in a speech to business leaders.
U.S., ASIAN DEMAND SLUMPS
The yen has surged around 20 percent against the dollar this year as investors, spooked by the global financial crisis, bailed out of risky assets and brought funds home.
The deepening economic gloom at home and abroad is triggering output cuts by major Japanese companies such as Toyota, which slashed its annual profit forecasts in its second profit warning in less than seven weeks.
Automakers around the world face the toughest business environment in recent memory, caught in a sharp reversal of demand as credit dries up and consumers close their wallets.
Shipments to the United States, which is in recession, sank a record 33.8 percent on slack demand for automobiles, the trade balance data showed.
U.S. demand for Japanese goods has been falling for 15 months, ever since U.S. mortgage defaults started to squeeze global credit markets.
By contrast, Asian markets held up for much of the crisis, but are now crumbling at a dizzying speed. Exports to Asia fell 26.7 percent in November.
Shipments to China dropped 24.5 percent, the biggest fall since 1995, on weak demand for semiconductors, digital cameras and other electronic goods, the Ministry of Finance said. The Chinese economy is slowing sharply as exports to Europe and the United States plunge.
"The drop shows that domestic demand in China for Japanese goods is not that strong," said Kaori Yamato, an economist at Mizuho Research Institute.
The Japanese government grew more pessimistic about the economy for the third straight month, citing rapidly falling output and corporate profits in its economic report for December.
The Reuters Tankan survey found manufacturers' sentiment worsened 22 points -- the biggest monthly tumble ever recorded -- to minus 64 in December, the lowest reading since the survey began in June 1998.
For a graphic of the Reuters Tankan, go to: https://customers.reuters.com/d/graphics/JP_RTTNK221208.gif
The BOJ's rate cut followed a drastic reduction by the U.S. Federal Reserve, which announced a target rate of between 0 and 0.25 percent, the lowest ever.
Naoki Iizuka, senior economist at Mizuho Securities, said the BOJ could resort to cutting Japanese rates to zero as early as January to contain the slump. Some analysts see the central bank going even further by reverting to quantitative easing.
Most analysts define quantitative easing as a policy of flooding the market with excess liquidity by expanding the type of assets a central bank buys.
But the BOJ sticks to a stricter definition, saying it shifts to quantitative easing when it explicitly declares that it is targeting the amount of money circulating in the economy, not interest rates.
Japan used that method to fight its way out of deflation after a property and stock bubble burst in the 1990s. But it proved controversial and economists are still divided over whether the policy actually worked.
(Editing by Sophie Hardach)