Japan unveils economic aid, Belgian government falls

By Mike Peacock and Edward Tobin

LONDON/NEW YORK (Reuters) - Japan, Germany and Canada pledged new measures on Saturday to confront a financial crisis that has toppled banks, endangered the global auto industry and now played a part in the demise of Belgium's government.

Tokyo joined governments worldwide in pledging hundreds of billions of dollars of fiscal stimulus to lessen the impact of the crisis on their economies, many of which, Japan's included, are already in recession.

Its extra 4.79 trillion yen ($54 billion) budget, approved by the Cabinet on Saturday, will help finance two already-unveiled spending packages totaling 10 trillion yen.

In Canada, Prime Minister Stephen Harper unleashed C$4 billion ($3.3 billion) in emergency loans to the Canadian arms of Detroit's ailing automakers to keep them operating while they restructure their businesses. The lifeline comes just a day after the White House unveiled a $17.4 billion package to shore up Detroit's auto industry.

Harper also announced two new federal measures to support the overall industry -- one to benefit automotive suppliers and a second to help consumers get credit to buy cars.

"There are literally across the country hundreds of thousands, if not millions, of potentially affected families by the distress of this industry," Harper said.

German Chancellor Angela Merkel said her country would take "a further step" in January to boost its economy, having previously limited herself to saying government leaders would meet in the new year to review the situation.

In neighboring Belgium, King Albert consulted political leaders after the government collapsed following its botched attempt to bail out financial group Fortis.

Prime Minister Yves Leterme tendered his government's resignation on Friday after a report by the Supreme Court found signs of political meddling to sway a court ruling on the future of the bank, a victim of the credit crunch.

The king, who under the constitution must decide whether to accept the resignation, held successive talks with the heads of the five ruling-coalition parties until 2 a.m. on Saturday.

Consultations were to continue later in the day. Belgian media said there was little chance of Leterme staying on.

Leterme denied accusations he had sought to influence an appeal court that last week upheld a challenge by shareholders to a state-led carve-up of the bank, but acknowledged that the Supreme Court's findings made his position untenable.

The global economy's lifeblood -- credit -- remains severely constrained despite authorities spending trillions of dollars to keep money markets functioning, propping up banks and producing economic stimulus packages.

The boss of Britain's Barclays bank said it would be tough to get credit for up to two years yet.

"I think that we will see the process of reduced borrowing play out over at least the course of the next 12 months maybe, maybe 24 months," John Varley told BBC Television's Panorama program.