CORRECTED - TOPWRAP 7-European, U.S. banks suffer, recession a reality

(Corrects paragraph 10 to say that Midwest Banc Holdings would sell preferred shares to the U.S. Treasury in return for $85.5 million of capital)

* SocGen, HBOS, Midwest Banc and Commerzbank suffer

* European Commission says euro zone in technical recession

* South Korea announces $11 bln stimulus, Germany to follow

* Asian stocks up 6 pct, Europe flat, Wall St set to climb (For more on the financial crisis, click [nCRISIS])

By Mike Peacock

LONDON, Nov 3 (Reuters) - Profits evaporated at leading banks on Monday and authorities worldwide pressed on with efforts to temper a recession that policymakers said had become reality for much of the globe.

The European Commission said the 15-nation euro zone was in a technical recession and economic growth would come to a virtual standstill next year. It called for coordinated action.

In Jerusalem, Richmond Federal Reserve Bank President Jeffrey Lacker said the U.S. economy was contracting. Data last week showed it shrank at a 0.3 percent annual rate in the third quarter, its sharpest squeeze in seven years.

"I think it's definitely a recession at this point. How deep, how steep, and long it's going to be is uncertain," said Lacker, who will become a voting member of the Fed's interest rate-setting committee next year. [ID:nL2408917]

French bank Societe Generale (SOGN.PA) reported an 83.7 percent drop in third-quarter net profit. [ID:nL2427993]

Net profit fell to 183 million euros ($234 million) with losses from the collapse of U.S. bank Lehman Brothers and other writedowns costing it 1.208 billion euros in pre-tax income.

Germany's second-biggest bank, Commerzbank (CBKG.DE), said it would take an 8.2 billion euro capital injection from the state and another 15 billion to secure refinancing. It posted a third quarter net loss of 285 million euros. [ID:nL3543865]

Britain's biggest home lender HBOS Plc HBOS.L raised its hit from the value of risky assets and bad loans to over 5 billion pounds ($8.14 billion) as its takeover partner Lloyds TSB (LLOY.L) predicted a sharp fall in profits. [ID:nL3542383]

Lloyds stepped in to buy HBOS in a government-brokered deal after HBOS was hit by the crisis and concerns about its exposure to Britain's weakening housing market.

In the United States, Illinois-based Midwest Banc Holdings Inc posted a $159.7 million third-quarter loss, and said it obtained preliminary approval to sell preferred stock to the the U.S. Treasury in return for $85.5 million of capital.

Washington, Berlin, Paris and London have all offered to inject capital into their banks to prevent systemic meltdown.

French Prime Minister Francois Fillon was quoted by Le Figaro newspaper as saying that if banks did not use the money to lend to businesses, then the government could take direct stakes in them, as Britain has. [ID:nL3535556].

The credit crunch, which stemmed from a collapse in the U.S. housing market, has prompted banks to clam up on lending to each other, businesses and households for over a year now.

Interbank lending rates fell, extending last week's decline, reflecting ongoing central bank efforts to add liquidity rather than banks lending to each other.

Banks deposited a record 280 billion euros with the European Central Bank on Monday rather than making it available to peers.

RECESSION PROMPTS STIMULUS

While trillions of dollars in bailouts may have averted a banking collapse, the economic outlook is grim, prompting governments to put together fiscal stimulus packages to ease a recession born of the worst financial crisis in 80 years.

"The horizon that this forecast offers is dark ... recession is a real risk," EU Monetary Affairs Commissioner Joaquin Almunia said after the European Commission forecast euro zone growth of just 0.1 percent next year. [ID:nL3573272]

A technical recession is defined as two successive quarters of contraction.

Official data supported Almunia's prognosis.

Euro zone manufacturing activity sank in October to a record low. The Markit Eurozone Purchasing Managers Index slumped to 41.1 -- the lowest in the survey's 11-year history.

Berlin aims to safeguard one million jobs with pump-priming measures to be agreed in cabinet on Wednesday, by spending more than 30 billion euros.

South Korea announced plans to pump an extra $11 billion into its economy next year. Finance Minister Kang Man-soo said economic growth could fall to its lowest in more than a decade without the stimulus, which will need approval by parliament.

Policymakers will gather again to plot their next moves.

Euro zone finance ministers meet in Brussels to discuss reform of institutions that manage the global financial market and bodies such as credit rating agencies, accounting rules-setters, banks and their management. [ID:nLV2413]

And finance chiefs from the "Group of 20" nations gather in Brazil later this week to prepare for a U.S.-hosted Nov. 15 summit of world leaders to chart a way out of the crisis.

"The leadership America has shown ... has been vital to the coordinated rate cuts and the international cooperation we have seen which will lead to the meeting of international leaders on November 15. That leadership will and must continue," British Prime Minister Gordon Brown said in Abu Dhabi.

RATE CUTS COMING

Central banks will also put their shoulders to the wheel.

Following rate cuts from the Fed, China and Japan last week, the European Central Bank, Britain and Australia are expected to cut interest rates by at least 50 basis points this week.

The efforts to buoy the world economy encouraged some investors to shop for bargains after world stock markets fell 20 percent in October alone, their worst month ever.

The MSCI index of stocks in the Asia-Pacific region outside Japan rose 5.9 percent, European shares were flat [ID:nL3630226] and U.S. stock futures pointed to a higher start on Wall Street.

The economic upheaval has relegated Tuesday's U.S. presidential election to little more than a footnote for financial markets. Investors have factored in a victory for Democrat Barack Obama, who leads in opinion polls. (Editing by Elizabeth Piper)