The Bank of England cut its key rate by half a point to a record low level of 0.50 percent to turn back recession and said it would pump newly created money into the economy, and the European Central Bank was also expected to cut to a record base of 1.50 percent.

European Union data showed the eurozone economy contracting by 1.5 percent in the last quarter of 2008 from output in the third quarter, owing largely to a 7.3-percent drop in exports.

"We expect further sharp fall to come," Capital Economics consultant Ben May said in Brussels.

And ratings agency Standard and Poor's warned that Ukraine was facing a "balance of payments crisis" because of plunging prices for its exports.

"The refinancing risk for the banking system is enormous," SandP analyst Frank Gill said.

European stocks and the euro fell as the full picture for European interest rates was awaited.

Leading European stock markets were showing falls of 1.55 percent in London to 3.28 percent in Italy.

The New York oil contract in London retreated by 87 cents to 44.51 dollars per barrel aftr a rally on Wednesday on falling US oil inventories.

"The focus of the foreign exchange market is now clearly on the monetary policy announcements," the European head of currency research at The Bank of Tokyo-Mitsubishi UFJ, Derek Halpenny, said.

The dollar was supported by a US scheme to protect home-owners threatened with repossession and a perception that US stimulus measures would have the most impact eventually, even though immediate interest focused on statements from Beijing.

The Chinese leadership announced a huge boost to social spending, just as more negative data on the Japanese, European and US economies added to the global economic crisis.

China faces "unprecedented difficulties and challenges," over the crisis, Premier Wen Jiabao told the annual sesssion of parliament.

He gave some details of stimulus spending to total four trillion yuan (585 billion dollars), promising to boost social programmes massively.

The country would overcome the crisis, he assured, forecasting that it could still achieve growth of eight percent this year and that this was essential for "ensuring social stability."

In Japan, Prime Minister Taro Aso said that "the economy is rapidly worsening, that there was "no bottom in sight."

The finance ministry reported a record 17.3-percent drop in business investment in the last quarter of last year over 12 months.

And the US Federal Reserve central bank said late on Wednesday that US activity "deteriorated further" in February and that a significant pickup was not expected before late this year or early in 2010.

In Europe, data for German retail sales showed an unexpected fall of 0.6 percent in January, because gloom was "weighing considerably" on private spending, UniCredit economist Alexander Koch said.

The European carmakers' trade group ACEA forecast overnight that European auto output would fall by 25 percent this year.

The head of French group Renault, Carlos Ghosn who gave the figure, said that last week the estimate was 15 percent. "Things are changing all the time," he said.

"When we have a look at the February sales, there's only one market which is up, it's Germany. And Germany is up only in one segment, the low segment of the market which exploded, due mainly to the scrapping incentives," he said referring to a scrap-for-new subsidy.

Ghosn called for joint European intervention, saying the sector needed 40 billion euros (50 billion dollars).

In Berlin, a German trade union official estimated that if Opel, a subsidiary of stricken US auto giant General Motors (GM) collapsed, 400,000 jobs would be lost across Europe.

In Brussels, the European Commission proposed a meeting of all European countries hosting factories run by GM to coordinate their response to the company's problems.

Trade data in Britain showed car sales slumping 22 percent in February.

Meanwhile, investment bank Goldman Sachs estimated that the total of eurozone stimulus packages had risen to about 200 billion euros from 130 billion euros in its last estimate in October.

The Chinese spending unveiled by Wen included a 17.6-percent increase in social security expenditure to 293 billion yuan (43 billion dollars), a 38.2-percent rise in spending on health care to 118.1 billion yuan, and 42 billion yuan for job creation.

And China would keep the exchange rate of the yuan basically stable this year, he said.

A China expert at City University of Hong Kong, Joseph Cheng, commented: "This spending will improve the quality of life for the people, and it will also enhance the legitimacy of the regime."

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