* Australia, Japan fall, U.S. stock futures drop 1%

* Interbank futures imply rate cuts by Fed, RBA

* Stocks had worst week since 2008

* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Tom Westbrook

SINGAPORE, March 2 (Reuters) - The rout in world stocks deepened on Monday, with investors rattled by weekend data from China that showed its fastest ever contraction in factory activity, raising fears of a global recession from the coronavirus.

Pandemic fears pushed markets off a precipice last week, wiping more than $5 trillion from global share value as stocks posted their steepest slump in more than a decade.

The sheer scale of losses has prompted financial markets to price in policy responses from the U.S. Federal Reserve to the Bank of Japan and the Reserve Bank of Australia.

Futures now imply a full 50 basis point cut by the Fed in March while Australian markets are pricing in a quarter-point cut at the RBA's Tuesday meeting.

In equities, e-minis for the S&P500 declined more than 1%. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.3%.

Japan's Nikkei opened 1.3% lower at a six month trough. Australia's S&P ASX/200 fell 3% and New Zealand's NZ50 slid 3% into correction territory.

Benchmark U.S. 10-Year Treasuries hit a fresh record low of 1.0750%.

"There had been a lot of hope that today's market might open somewhat positive given the finish to the U.S. market," said Jun Bei Liu, portfolio manager at Tribeca Investment Partners in Sydney, referring to Friday's late climb from intraday lows on Wall Street.

"But the China PMI was significantly weaker than expected, and so we're seeing the continuation of the sell off," she said.

"Right now the problem is (the virus) is growing exponentially (beyond China), as an equity investor we're just not sure of what the ultimate demand impact is."

Leaders in Europe, the Middle East and the Americas rolled out bans on big gatherings and stricter travel restrictions over the weekend as cases of the new coronavirus spread.

The epidemic, which began in China, has killed almost 3,000 people worldwide as authorities race to contain infections in Iran, Italy, South Korea and the United States.

China on Saturday reported its fastest ever contraction in factory activity.

"It is now highly probable that the coronavirus will spread globally," Citi analysts said in a note

"Financial markets may over-react until they have visibility on the actual impact."

Investor panic last week sent bonds soaring and stocks plunging. The S&P 500 index fell 11.5%, only its fifth double-digit weekly percentage drop since 1940.