* BOJ doubles pace of ETF, J-REIT purchases for time being
* BOJ sets aside 2 trln yen for CP, corporate bond buying
* Short-, long-term rate targets left unchanged
* Gov Kuroda says BOJ has room to deepen negative rates
* BOJ ready to ease more if virus hurts economy - Kuroda (Adds Kuroda quotes)
TOKYO, March 16 (Reuters) - The Bank of Japan eased monetary policy on Monday by pledging to buy risky assets such as exchange-traded funds (ETF) at double the current pace, joining global central banks in combating the widening economic fallout from the coronavirus epidemic.
The central bank also decided to create a new loan programme to assist funding of small firms hit by the health crisis, and ramp up buying of commercial paper and corporate bonds.
BOJ Governor Haruhiko Kuroda said Monday's move, decided at a hastily arranged emergency meeting, was aimed at preventing credit markets from freezing up and ensuring firms have smooth access to money ahead of the March end of the fiscal year.
"As for the global economy, it's hard to foresee a V-shaped recovery. We might see global growth stagnate for some time," Kuroda told a news conference.
"The BOJ decided it was necessary to act quickly, particularly ahead of the March fiscal year-end, to ensure corporate financing remains smooth and markets restore stability," he said.
The decision came in the wake of the U.S. Federal Reserve's emergency rate cut to near zero on Sunday, and was followed hours later by an unexpected easing by the New Zealand central bank, underscoring policymakers' worries of a world economy unraveling rapidly amid the epidemic.
At the meeting, the BOJ decided to buy ETFs at an annual pace of around 12 trillion yen ($112.55 billion), double the previous amount, until markets stabilise from the recent rout.
It will also double the pace of purchases for Japanese real-estate trust funds (J-REIT) to 180 billion yen per year, for the time being, the statement said.
The BOJ said it will revert to the original pace of buying once markets stabilise, suggesting that the stepped-up purchases were a temporary measure to address the latest market turmoil.
In a bid to prevent credit markets from freezing up, the central bank will also set aside 2 trillion yen for additional purchases of commercial paper and corporate bonds.
The BOJ left unchanged its -0.1% short-term interest rate target and a pledge to guide long-term rates around 0%.
Prime Minister Shinzo Abe welcomed the BOJ's decision as "swift and appropriate" in light of recent market turbulence.
But markets were unimpressed, with Tokyo stocks sliding to their lowest in three and a half years on Monday.
"Compared with other central banks such as Fed, the BOJ's steps lacked boldness. It clearly showed there's little room left for the BOJ to ease further," said Toru Suehiro, senior market economist at Mizuho Securities.
Monday's meeting replaced a regular rate review that was initially scheduled for March 18-19.
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.
Kuroda shrugged off the view the BOJ was running out of ammunition to spur growth, stressing his readiness to cut rates or take other easing steps again as needed.
"I don't think we have reached a limit on how deep we can cut interest rates," Kuroda said. "If the economy and prices come under further pressure, we will of course consider additional monetary easing steps."
But Monday's decision has left the BOJ with even fewer policy tools to fight rising risks facing Japan's economy.
Kuroda conceded that slumping oil prices could weigh on inflation already slowing from soft consumption, making his 2% price target even more elusive.
Rate cuts - among the remaining few options - are highly controversial in Japan due to the damage prolonged easing has inflicted on bank profits. Deeper negative rates may have little effect in fending off an unwelcome rise in the yen, analysts say. The yen is often seen as a haven from risk, given Japan's status as the world's largest creditor nation.
"The BOJ could be forced to ease policy again to battle the shock from the coronavirus," said Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance.
"The biggest risk for the BOJ is a yen spike. We didn't see that happen today. But if yen gains accelerate, the BOJ may be forced to respond."
($1 = 106.6200 yen) (Additional reporting by Daniel Leussink, Kaori Kaneko and Sam Nussey; Editing by Chris Gallagher, Shri Navaratnam and Jacqueline Wong)