(Updates with analysts' comments)
By Marcin Grajewski
BRUSSELS, Oct 30 (Reuters) - Euro zone economic sentiment plunged to its lowest level since 1993 in October, suffering its biggest ever monthly fall, data showed on Thursday, suggesting recession and boosting expectations of an interest rate cut.
The monthly survey by the European Commission for the 15 countries using the euro showed the economic sentiment indicator fell to 80.4 points from the downwardly revised 87.5 percent in September and lower than market expectations of 86.
It was the indicator's lowest reading since the 73 points recorded in July 1993 and the biggest ever monthly fall.
"These are truly dismal results. They indicate that the euro zone is falling into a significant and broad-based recession," said Holger Schmieding, co-head of Europe economics at Bank of America.
Analysts said the euro zone probably entered technical recession -- defined by two straight quarters of contraction -- in the second quarter of 2008, before the global credit crunch escalated into the world's worst financial crisis in 80 years.
Economists said the contracting euro zone economy was easing pressure on prices, which is likely to trigger more rate cuts eventually from the European Central Bank.
The ECB lowered its main rate by 0.5 percentage points to 3.75 percent in early October as part the world's central banks' concerted action to support a flagging economy. Economists now expect the ECB to lower its borrowing costs again on Nov. 6.
"We think we will see the ECB cut rates next week -- we think by 50 basis points -- and governments will react with policy measures," said Christoph Weil, economist at Commerzbank.
The survey showed manufacturers' selling prices expectations declined in October to 6 points from 12 points. However, consumers expect higher inflation, with the index depicting price trends over the next 12 months increasing to 19 from 17.
Consumer sentiment nosedived to -24 points from -19 points, compared with analysts' expectations of -20, showing people were curbing spending, auguring ill for producers.
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.
Europe's car makers are shutting factories temporarily due to falling demand. The European Commission gave backing in principle on Wednesday for the sector's calls for soft loans from the European Investment Bank, and proposed a doubling of a multi-billion-euro loan fund to help countries in trouble.
The Commission said industry sentiment fell to -18 points from -12 points. The indicator for the services sector, which produces two thirds of the euro zone's gross domestic product, fell to -6 from 0 in September.
Separately, the Commission said its Business Climate Indicator (BCI) for the euro zone fell to its lowest in seven years, reaching -1.34 in October, a value last observed in November 2001.
"The low level of the indicator suggests that industrial activity remains subdued," the European Union executive Commission said in a statement on the indicator, which is based on a survey of company managers. (Additional reporting by Ingrid Melander and Pete Harrison) (Writing by Marcin Grajewski, editing by Mark John and Andy Bruce)