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UPDATE 2-BOJ likely to debate additional easing steps in Monday's emergency meeting

Leika Kihara and Takahiko Wada

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* BOJ holds emergency meeting from 12 p.m. (0300 GMT)

* Meeting to discuss steps to smooth financing, stabilize markets

* BOJ seen ready to expand monetary stimulus (Recasts with BOJ likely moves, machinery orders)

TOKYO, March 16 (Reuters) - The Bank of Japan is expected to take additional steps to stabilize markets and minimize the economic pain from the coronavirus outbreak in an emergency meeting on Monday, joining other central banks trying to soothe investors' nerves.

Sources familiar with the BOJ's thinking have told Reuters that the Japanese central bank was ready to ramp up asset purchases and take steps to ensure small and midsize companies do not face a shortage of funds ahead of the March 31 fiscal year-end.

The meeting, under way from 12 p.m. (0300 GMT), comes hours after unscheduled interest rate cuts by U.S. and New Zealand central banks aimed at combating the fallout of the virus.

"The meeting is likely to discuss measures to smooth corporate financing and stabilize financial markets," one of the sources said.

Many market players expect the BOJ to ramp up purchases of risky assets such as exchange-traded funds (ETF), corporate bonds and commercial paper to funnel more money to markets and companies via financial institutions.

Deepening negative interest rates is considered a less likely option given the strain already ultra-low rates is inflicting on financial institutions' profits.

Monday's meeting will will replace the scheduled rate review on March 18-19. BOJ Governor Haruhiko Kuroda is expected to hold a news conference after the meeting.

The BOJ's review comes in the wake of the U.S. Federal Reserve's emergency 100-basis point rate cut to near zero on Sunday, which was followed hours later by an unexpected 75 basis point easing by the New Zealand central bank, underscoring policymakers' worries of a world economy unraveling rapidly amid the epidemic.

Japanese Prime Minister Shinzo Abe has said the government will work closely with the BOJ to take "bold, unprecedented" measures to mitigate the pain the epidemic is inflicting on the world's third-largest economy.

Under a policy dubbed yield curve control (YCC), the BOJ guides short-term rates at -0.1% and the 10-year government bond yield around zero. It also buys risky assets such as ETFs.

Japan's core machinery orders unexpectedly rose in January, in a positive sign for business investment though worries remain about the economic outlook in light of the widening fallout from the coronavirus outbreak. (Reporting by Leika Kihara; Editing by Chris Gallagher & Simon Cameron-Moore)