London and other stock markets rallied a day after the EU unveiled a 200-billion-euro (260 billion dollar) stimulus package and China announced its biggest interest rate cut in a decade.

China's top planning minister, Zhang Ping, said Thursday however that the country's economy had slowed further in November and he warned of the dangers of mass unemployment and social unrest.

"Some companies have stopped all or part of their operations," said Zhang. "If too many enterprises suspend business or stop production, it will result in large-scale unemployment and it could trigger social instability."

Elsewhere, companies reported more cuts in jobs and profits.

Japanese consumer electronics giant Panasonic Corp. slashed its net profit forecast for the current financial year by 90 percent due to weak sales.

Norinchukin Bank, the de facto central bank for Japan's farm and fishery cooperatives, announced a 10.5-billion-dollar capital hike to shore up its finances -- the biggest yet by a Japanese bank during the financial crisis.

Automakers announced more layoffs to cope with the industry slump. Mitsubishi Motors Corp. said it would cut 1,100 jobs in Japan while Subaru-maker Fuji Heavy Industries will axe 800 posts.

In the once-booming steel industry, ArcelorMittal said that it could slash up to 9,000 jobs across the group worldwide through voluntary redundancies.

International airlines -- another sector on the front line of the economic downturn -- saw passenger traffic fall for a second consecutive month in October, the industry association IATA said on Thursday.

"The situation of the industry remains critical," said Giovanni Bisignani, director general of the International Air Transport Association.

Two of China's biggest airlines, China Southern Airlines and China Eastern Airlines, announced Thursday they had received or were seeking hundreds of millions of dollars in state aid.

A survey in Europe showed that, with so much bad news around, consumers and businesses are losing confidence -- which starts a negative cycle for the economy.

Consumer consumer and business confidence in the European Union slumped in November to the lowest level in 23 years in the face of the looming recession, according to the European Commission's EU economic sentiment indicator.

Markets pinned hopes on steps by policy makers to revitalise the world economy in the face of the worst financial crisis since the Great Depression.

On Tuesday, the Federal Reserve had announced it would buy up to 600 billion dollars in mortgage securities, with another 200 billion dollars allocated for asset-backed securities to help get credit flowing again to consumers.

Stocks rose 1.95 percent in Tokyo, 3.3 percent in Seoul, 1.4 percent in Sydney and Hong Kong, and 1.05 percent in Shanghai.

In Europe, shares gained 1.61 percent in Paris, 2.13 percent in Frankfurt and 1.81 percent in London in early trading.

Investors were "looking ahead, rather than at the shaky ground below their feet," said Kazuhiro Takahashi at Daiwa Securities SMBC in Tokyo.

Wall Street was closed Thursday for the Thanksgiving holiday.

Spain's Prime Minister Jose Luis Rodriguez Zapatero was due on Thursday to outline a stimulus package by his government to support the key Spanish construction and automotive industries.

Several other European countries have announced national plans to combat recession, including a huge tax-and-spend program in Britain and a 32-billion-euro package in Europe's biggest economy, Germany.

Share prices also got support from hopes of steps by US president-elect Barack Obama to shore up the US economy, dealers said, as US data suggested the world's biggest economy was sliding into a deep recession.

US consumer spending dropped 1.0 percent in October, the steepest fall since September 2001, while key durable goods orders plunged 6.2 percent and weekly jobless claims rose to a fresh 16-year high.

Against the tide of gloom, researchers at UBS bank said that some plunging industrial forecasts in Europe were heading for a gradual recovery.

"We... expect surveys to bottom out during the next few months," they wrote in a report.

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