TOPWRAP 6-Germany and China feel the pain of global downturn

* Germany enters recession

* OECD cuts forecasts for United States, Japan and euro zone

* China industrial output worst since October 2001

* Wall Street set to fall after U.S. jobs claim surge

(For more on the financial crisis, click [nCRISIS]

By Keith Weir

LONDON, Nov 13 (Reuters) - Germany is in recession and China's industry output growth has waned to its weakest in seven years, data from the world's top exporting nations showed on Thursday, providing further evidence of a global economic slide.

Adding to the bleak picture, the Organisation for Economic Cooperation and Development (OECD) slashed its economic output forecasts for the United States, Japan and euro zone, predicting a tumble into recession for all three. [ID:nLD41617]

The worst financial crisis in 80 years, which rippled around the world following the collapse of the U.S. housing market, is taking a heavy toll on economic activity.

Germany said its economy, Europe's largest, contractedby 0.5 percent in the third quarter, putting it in recession for the first time in five years. [ID:nLD496344]

The decline -- much sharper than the 0.2 percent forecast -- was accentuated by German export growth grinding to a halt.

"We are going to have to face up to a very difficult and long-lasting economic crisis," Germany's Deputy Economy Minister Walther Otremba told Reuters.

Analysts agreed with that grim forecast.

"The headwinds of the financial crisis and the global economic slowdown are blowing right in the face of the German economy," said Carsten Brzeski of ING Financial Markets.

"Even more worrying, the full impact of the financial crisis still has to unfold," he said. "If you think today's numbers are already bad, just wait for the next quarter."

In China, which has unveiled a 4 trillion yuan ($586 billion) stimulus package, annual industrial output growth slowed to 8.2 percent in October, its weakest showing since Oct. 2001, as manufacturers scaled back production. [ID:nPEK238120]

Among corporates, British telecoms company BT Group BT. said it was cutting 10,000 jobs at home and overseas.

Wal-Mart Stores Inc <WMT.N), the world's largest retailer, reported better-than-expected quarterly profit. The company said its cost-cutting format was helping to attract shoppers.

TIMELY BOOST?

After a series of big rate cuts by central banks, the OECD said it was time for more governments to provide an extra boost to their economies in the form of fiscal stimulus in the form of tax cuts or increased government spending.

President-elect Barack Obama is advocating a second U.S. fiscal package and help for American carmakers, Japanese politicians are debating the details of a pump-priming plan and the British government is expected to follow suit in its pre-budget report later this month. Germany has already agreed a plan to give its economy a 50 billion euro boost.

Governments around the world have pledged around $4.6 trillion for bank bailouts, credit guarantees and fiscal spending to contain the damage from the financial turmoil.

European Central Bank policymaker Ewald Nowotny said the euro zone was already in recession, ahead of official figures on Friday. He said new ECB forecasts next month could point to ongoing recession in 2009.

G20 GATHERING

Leaders of the G20 industrialised and emerging nations will gather in Washington on Friday to discuss the crisis with investors hoping for concrete policy action.

Japan is prepared to offer foreign reserves worth up to $100 billion to the International Monetary Fund (IMF) if the Washington-based lender needs extra funds to help emerging economies, a government source said on Thursday. [ID:nT198541]

Japanese Prime Minister Taro Aso will make the proposal at the G20 summit, the source told Reuters.

The summit falls at an awkward time politically as U.S. President George W. Bush prepares to leave office. He will travel to Wall Street on Thursday to outline his views on the financial markets. [ID:nN12305303]

"We should fix the problems we have rather than dismantle a system that has improved the lives of hundreds of millions of people around the world," White House spokesman Carlton Carroll said in previewing Bush's remarks.

Some leaders have called for big reforms to the financial system, but the Bush administration has been more cautious.

"Will the world change on Saturday? I think it will begin to change, because the collective spirit is willing," British finance minister Alistair Darling told the Independent daily.

"But it will take time."

Shares slid and the price of oil CLc1 hit a 22-month low at $55 a barrel on worries that a recession will curb demand.

Stocks in Europe .FTEU3 were 0.6 percent lower, the third straight day of losses and U.S. stock futures extended losses after a steeper-than-expected surge in the number of Americans filing for jobless benefits.

Banks from Asia to Europe warned of tough times ahead.

Mizuho Financial Group (8411.T), Japan's second biggest bank, plans to raise up to $3.1 billion after unveiling a $402 million quarterly loss. Bank of Ireland's (BKIR.I) profits fell by a third and it cancelled its cash dividend and shares in Commonwealth Bank of Australia (CBA.AX) hit a four-year low after it warned investors to expect a big jump in bad debts. (Additional reporting by Reuters bureaux worldwide; Editing by Mike Peacock)