TOPWRAP 2-Australia cuts rates, Japan acts on funding squeeze

* Reserve Bank of Australia cuts rates for 4th month in a row

* Rate cuts seen in Europe, New Zealand this week

* Bank of Japan lowers bar on collateral to ease pressure

* Global stocks tumble after U.S. declared in recession

* China policymakers to meet next week on 2009 growth (Adds result of Bank of Japan meeting) (For full coverage of the financial crisis [nCRISIS])

By Wayne Cole and Hideyuki Sano

SYDNEY/TOKYO Dec 2 (Reuters) - Australia slashed interest rates and the Bank of Japan moved to ease an acute cash crunch for companies, kicking off another round of global central bank action to soothe markets and shore up crumbling economies.

Britain, the euro zone and New Zealand will almost certainly cut interest rates later this week. In addition to more rate cuts, the Federal Reserve is weighing other responses with its benchmark rate nearing zero and the U.S. economy now officially in recession.

Asian stocks tumbled, tracking slides in Europe and on Wall Street, and U.S. government bond yields collapsed to half-century lows, as fear about the economic outlook gripped investors.

The arbiter of U.S. economic cycles confirmed some of those fears overnight, saying the U.S. economy was in the third-longest recession since the Great Depression. [ID:nN01512121]

The Reserve Bank of Australia (RBA) cited the perilous state of the global economy when it cut the benchmark cash rate by a full percentage point to 4.25 percent, a bigger margin than most analysts had forecast. It left the door open to more cuts.

"The economy is poised on a knife edge and the RBA is going to keep cutting until it starts to get traction with consumers and housing," said Macquarie senior economist Brian Redican.

The Bank of Japan decided to keep its benchmark unchanged at an emergency meeting called to deal with a cash squeeze on Japanese companies, facing slumping export markets and an economy that appears to be on course for it longest contraction ever.

PRESSURE TO RESPOND

The central bank temporarily broadened the range of collateral it would accept to include triple-B-rated corporate debt for loans of up to three months. That would help cash starved firms get through the year-end funding squeeze.

Liquidity is usually tight near year-end and investors are bracing for an even greater squeeze this year after a credit crisis triggered by U.S. mortgage defaults destroyed banks from Wall Steet to Iceland.