TOPWRAP 2-U.S. bank crisis deepens as ECB rate cut expected

* European Central Bank seen cutting interest rates
* Equity markets slide on bank news and weak data
* Citigroup shares plunge as banking crisis returns
* U.S. govt close to giving Bank of America new aid-source (For more on the global economic crisis, click [nCRISIS])
By Sakari Suoninen and Tetsushi Kajimoto
FRANKFURT/TOKYO, Jan 15 (Reuters) - Bank of America and Citigroup faced fresh turmoil as investors questioned if they had the capital strength to cope with a global crisis that is set to push the European Central Bank to cut rates later on Thursday.
Data across the developed world pointing to a deepening recession and fears that more public money in the United States may be needed to keep banks afloat weighed on financial markets.
Asian equities followed European and U.S. markets to fall to multi-week lows. Tokyo's Nikkei average slipped close to 5 percent after news that Japan's core machinery orders fell at a record pace in November. [ID:nT164777] [ID:nT230571]
Shares in Bank of America (BAC.N) and Citigroup (C.N), two of America's biggest banks, fell as they faced a fresh crisis of confidence over whether they have enough capital to cover haemorrhaging losses from toxic assets and the struggling global economy.
"The large banks in the U.S. are not lending, and they're desperate to conserve capital," said Dan Alpert at Westwood Capital in New York. "Banks only remain going concerns because the federal government is topping up their equity."
The financial crisis began in credit markets in 2007, when bank lending dried up in the face huge losses in the U.S. housing market. The global economy has deteriorated relentlessly since, pushing the biggest developed countries into recession and raising alarm bells over rising job losses.
Citigroup, whose shares dived 23 percent on Wednesday, plans to report quarterly results six days ahead of schedule on Friday and analysts are looking for a fifth straight multibillion-dollar loss. [ID:nN14490234]
The bank was also widely expected to provide details of a reorganisation of the company designed to ensure its survival.
Bank of America is close to receiving billions of dollars of support from the U.S. government, a source familiar with the matter said, as it tries to digest Merrill Lynch & Co Inc, the investment bank and brokerage it bought on Jan. 1.
Merrill has billions in troubled assets -- ranging from commercial real estate to subprime mortgages -- that suffered during a brutal fourth quarter.
Citigroup has already been propped up with $45 billion in government funds from the Troubled Asset Relief Program (TARP), while Bank of America and Merrill have received $25 billion