Japan recession gloom deepens; U.S. seeks auto deal

* Japan in deeper recession than previously thought

* Tokyo considers $216 bln stimulus - report

* White House, Congress hammer out U.S. auto package plan

* Westpac raising $1.7 bln to shore-up capital

HONG KONG, Dec 9 - Japan sank deeper into recession than previously thought and is reportedly mulling $216 billion in new stimulus spending to fend off the global financial crisis, while the United States worked towards a rescue package for its battered auto makers.

In Australia, No.2 lender Westpac said on Tuesday it was raising $1.7 billion through a share sale to bolster its balance sheet, while globally companies continued to shed jobs, cut spending and reign in sales forecasts.

Shares in Asia were flat on Tuesday after Monday's furious rally, with investors heartened by the prospect of a bailout for the "Big Three" Detroit automakers and other stimulus measures including a huge infrastructure building programme planned by U.S. President-elect Barack Obama.

The MSCI index of stocks in Asia excluding Japan was up 0.4 percent after a 7 percent jump on Monday, while Tokyo's Nikkei index rose 0.5 percent.

"There's a sense of relief because the Big Three automakers will likely manage to survive. If they were to fail, that would have led to a further deterioration in the economy," said Kazuhiro Takahashi, general manager at Daiwa Securities SMBC in Tokyo.

Economic data and the outlook from the corporate sector were almost uniformly gloomy as the crisis which began in the U.S. mortgage market more than a year ago took a widening toll on the global economy and profits.

In Beijing, a central bank adviser said that November exports may have fallen from a year earlier and growth in industrial production could have slowed to about 5 percent.

South Korea's Samsung Electronics Co Ltd, the biggest maker of memory chips and liquid crystal displays, said it was cutting targets for sales, capital expenditure and profit to factor in tough economic conditions.

Japanese car maker Mitsubishi Motors Corp said it will suspend production at a plant in Illinois for seven weeks next year because of a slump in demand.

The capital-raising by Westpac is the latest in what is expected to be a growing series of such measures by Asia-Pacific lenders that are confronting economic slowdowns at home. Already, Japan's two top banks have raised a combined $8 billion to replenish capital.

DRIVING TOWARDS CAR DEAL

In Washington, the White House and congressional Democrats met to hammer out details on a plan that would provide $15 billion to Ford Motor Co, General Motors and Chrysler LLC.

Late on Monday, U.S. President George W. Bush said that before the government provides financial aid to the industry, all aspects of their businesses must be examined to see if they can survive in the long term.

"There needs to be viability," he said in an interview with ABC News' "Nightline". "Viability means that all aspects of the companies need to be re-examined to make sure that they can survive in the long term."

The U.S. employment picture continued to darken, with Dow Chemical Co and hotel operator Wyndham Worldwide Corp announcing 9,000 job cuts between them on Monday. That followed Friday's report showing U.S. employers slashed 533,000 jobs in November, the most in 34 years.

GLOOMY JAPAN

Japan released data showing that its economy fell more deeply into recession in the third quarter than initially thought and putting the world's second-largest economy on track for its longest stretch of contraction ever.

The world's biggest economy after that of the United States shrank 0.5 percent in the third quarter, deeper that a preliminary reading of a 0.1 percent contraction.

The government of Prime Minister Taro Aso was considering a new economic package that includes spending of up to 20 trillion yen ($216 billion), the Yomiuri newspaper reported, without citing sources.

"We need to make every effort to expand domestic demand. We shouldn't hesitate to examine various measures," Japanese Economics Minister Kaoru Yosano told a news conference.