Japan cut interest rates to just above zero and announced extra steps to ease a credit crunch that has ravaged companies worldwide and plunged leading economies, including its own, into recession.
Highlighting a squeeze on global manufacturers, Germany's ThyssenKrupp AG said it would cut crude steel production to a minimum level from February if demand stayed weak, and introduce shorter hours for 20,000 steelworkers.
Swiss group ABB, one of Europe's top engineering firms, said its orders weakened in October and November. Despite sticking to this year's growth targets, its shares fell four per cent.
Carmakers are among the hardest hit by the global economic downturn, with Japan's Toyota expected to report its first ever annual loss and US firms scrambling to secure emergency government funding to avoid collapse.
The head of Japan's No. 2 automaker, Honda, warned the strong yen could cripple Japanese industry and spur massive layoffs. Honda would be forced to shift more production abroad if the dollar persisted below 100 yen.
The dollar managed to halt a persistent slide after Japan's rate cut, as traders locked in profits from the euro's rally to a two-and-a-half month high against the dollar and its strongest level ever against the sterling.
The Bank of Japan's decision to lower its key policy rate to 0.10 per cent from 0.30 per cent follows Tuesday's dramatic rate cut by the US Federal Reserve, which took rates there below Japan's and helped push the yen to a 13-year high against the dollar, putting pressure on the BOJ to take action.
The BOJ said it would step up outright buying of Japanese government bonds and temporarily buy commercial paper outright - further moves to ease the credit squeeze throttling the world's second-biggest economy, already in recession.
Calling the economic turmoil of the past few months "the most rapid in our lifetime", BOJ Governor Masaaki Shirakawa told a news conference he could not rule out further rate cuts.
He said the moves did not mark a return to quantitative easing - the final option of any central bank, when it floods the financial system with cheap funds to try to revive lending.
"The BOJ appears to have gone all out this time by deciding to take a wide variety of steps," said Koji Ochiai, senior market economist with Mizuho Investors Securities. "What was a little surprising, however, was that it did not lower interest rates all the way to zero like the Fed did this week. The BOJ leaves itself exposed to pressure to now cut rates to zero."
The crisis that began with a meltdown in the US housing market and saw banks infected with toxic debt has spread from the financial sector to envelop much of the global economy.
The German economy's downward slide is likely to gather speed in the final quarter of this year but deflation should not be feared, the Finance Ministry said in its December monthly report on Friday.
French business confidence fell to a historic low in December, sliding much more sharply than expected. But British consumer confidence rose unexpectedly for the second month running as some shoppers took advantage of high street discounts and a sales tax cut to bring forward major purchases.
While leading central banks have slashed interest rates, governments have scrambled to come up with stimulus measures.
German Chancellor Angela Merkel - under pressure from EU partners to do more to boost the continent's biggest economy - said her government would pursue a new package next year that would focus on infrastructure projects such as schools and roads.
In a telling sign of falling global demand, oil prices have hit four-year lows despite a big OPEC supply cut this week aimed at supporting the price.
Saudi Oil Minister Ali al-Naimi said cheap oil was causing "havoc" on investment plans in producer countries. Libya's top oil official said prices could fall lower still before the OPEC cartel's latest cuts pushed them back up.
In the US, General Motors Corp. and Chrysler LLC closed in late Thursday on a deal to secure emergency loans as part of a US government aid package that would demand sweeping restructuring at the troubled automakers, sources familiar with the talks told Reuters.
Emergency federal loans for the two could be announced as early as Friday, when Chrysler is set to begin a month-long production halt, the sources said. US Treasury Secretary Henry Paulson offered mixed signals on the chances of a bailout for the industry, saying failure of firms such as Chrysler and GM was not an option but adding that any potential bankruptcy should be "orderly".