By Wayne Cole SYDNEY, Nov 4 (Reuters) - Australia slashed interest rates on Tuesday, presaging cuts expected in Europe later this week in the face of mounting evidence that the global financial crisis has already pushed much of the world into a damaging recession. The larger-than-expected 75 basis point cut by the Reserve Bank of Australia followed rate cuts in the United States, China and Japan last week. Britain and the euro zone were expected to follow suit on Thursday. But the recession that central banks and governments around the world have been trying to ward off loomed ever larger as investors digested a batch of bleak corporate results and dismal economic data. Automotive companies from Japan to Italy and Detroit said October sales were the worst in about 20 years as economies weakened sharply and consumer credit dried up. With the U.S. presidential campaign wrapping up on Tuesday after nearly two years, markets expected some temporary relief for equities from the elimination of one source of uncertainty. [ID:nHKG292261] Some analysts said a victory of Democrat Barack Obama, who leads Republican John McCain in opinion polls, could boost market hopes for more fiscal stimulus. The next inhabitant of the White House, though, will have a tall order in crafting policies to revive the economy from devastation wrought by the worst financial crisis in 80 years. The latest gloomy note came from the Australian central bank. "International economic data have continued to point to significant weakness in the major industrial economies, and there have been further signs that China and other parts of the developing world are slowing as well," it said in a statement after it cut rates. TOO MUCH LOOSENING? With Taiwan and South Korea also cutting rates last week, Sherman Chan, an analyst at Moody's Economy.com in Sydney, praised Asian central banks for their assertiveness but sounded a cautionary note. "Excessive loosening could backfire by sparking fears about the soundness of the economy and financial system," Chan said in a research note. This would be a concern especially to emerging economies, whose appeal to investors has already weakened amid rising risk aversion." Synchronised rate cuts by central banks worldwide and emergency government spending packages worth some $4 trillion have brought markets back from the edge of the abyss, though investors have remained wary. "We expect another major episode of risk aversion to take hold of markets in the near future," said Dariusz Kowalczyk, chief investment strategist with CFC Seymour in Hong Kong. The cost of rescue measures was illustrated by South Korea's latest foreign reserves report. The country's stockpile, the sixth largest in the world, fell by a record amount in October to the lowest level in almost three years. The money was drawn down by authorities injecting billions of dollars into the country's banking system to stop the won's freefall and avert a repeat of the 1997-98 financial crisis that had put the country on the verge of default. [ID:nSEO252000] There was also more proof of the damage that the financial crisis has inflicted on ordinary wage earners. In Japan, summer bonuses fell and overtime pay dropped in September from a year earlier, underscoring the weakness of the economy that is already on the verge of a recession. [ID:nTKG003078] CAR TROUBLE Car sales, seen as one of the gauges of an economy's overall health, added to the gloom. U.S. vehicle sales plunged in October, with General Motors Co (GM.N: Quote, Profile, Research, Stock Buzz) down 45 percent, Ford Motor Co (F.N: Quote, Profile, Research, Stock Buzz) off 30 percent and Toyota Motor Co (7203.T: Quote, Profile, Research, Stock Buzz) down 23 percent. Mark LaNeve, GM's North American sales chief, said the collapse in the U.S. market was linked to the "unprecedented credit crunch that is dramatically impacting the entire U.S. economy -- from the housing market to big and small companies to banks to family run businesses." [ID:nN03339623] Adjusted for U.S. population changes, GM said, October was the weakest month for the battered auto industry since the end of World War Two. New car sales also fell across Europe -- down 40 percent in Spain and 19 percent in Italy. [ID:nL3115304] 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, and called for coordinated action to prevent further collapse. In the United States, factory activity contracted sharply in October, falling to its lowest point in 26 years, according one widely watched index. Two Chinese manufacturing surveys also registered all-time lows in October. "Pretty grim. It means we're in a recession. It's as simple as that ...a pretty solid manufacturing recession," said Robert Macintosh, chief economist at Eaton Vance Corp. "The question is how long or deep is it going to be?" [ID:nN03322916] Company results around the globe looked weak, particularly in the financial sector, where the credit crunch triggered by a downturn in the U.S. housing market virtually wiped out bank profits. [ID:nL3641851] UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz) and Swiss Reinsurance (RUKN.VX: Quote, Profile, Research, Stock Buzz) were to report their third-quarter results on Tuesday. Policymakers were set to gather again to plot their next moves. Euro zone finance ministers meet on Tuesday 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 [ID:nL377519] (Editing by Tomasz Janowski) (Reporting by Reuters bureaux worldwide; Writing by Simon Rabinovitch)

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