By Leika Kihara and Paul Carrel
TOKYO/BERLIN (Reuters) - German business sentiment posted a surprise rise in January, a survey from Europe's biggest economy showed on Tuesday, offering a glimmer of optimism in a global crisis which prompted Japan to extend aid to small companies.
Britain was also expected to announce further aid to industry with a package for automakers due later in the day while sources said Russia was preparing more support for banks.
Japan enacted a $53 billion extra budget and said it would offer a lifeline to the small- and medium-sized companies at the heart of the world's second-largest economy with a $16.7 billion fund to buy stakes.
Tokyo has already committed funds to help banks and spur lending but Prime Minister Taro Aso's ruling bloc is under pressure ahead of an election which must be held by October.
"In light of the looming election, the government needs to help companies that are bleeding losses," said Hiromichi Shirakawa, chief economist at Credit Suisse in Tokyo.
Britain's Business Secretary Peter Mandelson will announce a package of measures to help the UK's automakers, Prime Minister Gordon Brown's spokesman said.
In Russia, sources told Reuters that the government was set to help top bank Sberbank and other lenders with a second bailout package worth more than $27 billion. One government source said Russia planned to offer Sberbank a 500 billion rubles subordinated loan.
In the United States, Timothy Geithner, confirmed as treasury secretary on Monday, plans to overhaul a $700 billion program to rescue the world's largest economy from the worst financial crisis since the Great Depression. He is expected to propose new steps to unclog credit markets in the next two weeks.
Canada's budget and stimulus package, due later on Tuesday, will include incentives for home renovations and a promise of relief for credit card borrowers as well as tax breaks for middle- and lower-income Canadians, the Globe and Mail newspaper reported.
IFO POLL
Governments around the world have spent hundreds of billions of dollars on bank bailouts and fiscal stimulus, while central banks have slashed interest rates to record lows since a U.S. housing slump burst a global credit bubble.
German corporate sentiment improved in December for the first time in eight months, defying fears it would dip to a new post-reunification low for January, Ifo's monthly poll of around 7,000 firms showed.
Despite weakening demand and production cuts, the Munich-based economic think tank said the business climate index rose to 83.0, up from 82.7 in December and topping the 81.3 expected by 50 economists polled by Reuters.
"Businesses might be seeing some light at the end of the tunnel. However, the current conditions index fell further in January, which is a worrying indication that the recession could have deepened further," said Jennifer McKeown at consultancy Capital Economics.
German conglomerate Siemens on Tuesday posted an 81 percent drop in quarterly net profit but even that beat analyst forecasts. It said its targets this year had grown "more ambitious.
POLITICAL IMPACT
As euro zone companies and households cut back on imports from emerging European economies, the European Bank for Reconstruction and Development (EBRD) on Tuesday slashed its 2009 growth forecasts for emerging Europe to 0.1 percent from a level of 2.5 to 3 percent announced in November.
It cut its growth estimate for Russia to 1 from 3 percent.
In Reykjavik, Icelandic President Olafur Ragnar Grimsson was trying to put together a new government on Tuesday, one day after Prime Minister Geir Haarde's coalition collapsed under the weight of public protest over the downfall of the island's banking sector and currency.
"It's safe to say that no government in the history of Iceland has had to deal with as many and as complex problems as the one that is now leaving office," Grimsson told reporters at his residence late on Monday.
The latest repercussions of the crisis hit top Japanese brokerage Nomura Holdings Inc, which posted a record $3.8 billion quarterly loss due to buying Lehman Brothers' operations, soured trades and exposure to Iceland and accused swindler Bernard Madoff.
(Additional reporting by Linda Sieg in Tokyo; Kim McLaughlin in Reykjavik; Editing by Ruth Pitchford)
