Chinas economy is offering some signs of improvement but data on Monday showing a big fall in Japanese wholesale prices suggested the worlds second-largest economy is sliding back toward deflation. Seeking a concerted escape from the worst global crisis since the Great Depression, finance ministers from the Group of Seven leading nations will meet in Washington on April 24 and follow that with a Group of 20 ministerial session.
-- Japan wholesale prices fall, deflation looms again
-- Indias economic growth slows to below 7 percent
US Treasury Secretary Timothy Geithner will host both meetings, which come just weeks after the G20 leaders summit in London and before semi-annual gatherings of the International Monetary Fund and World Bank. The G20 has agreed on a $1.1 trillion deal to fight the crisis, including a huge infusion of funds for the IMF. But there are differences over steps to rebuild the financial sector, free up lending and stimulate economies. In India, a huge emerging market, the effects of the global downturn slowed economic growth to just below 7 percent in the 2008/09 fiscal year that ended in March, Prime Minister Manmohan Singh said.
A jump in Chinas industrial output last month, along with a record rise in new lending, gave credence to the idea that the bottom may not be far away. "It does seem that confidence is slowly growing among investors that the worst may be over for the global economy," said Hideyuki Ishiguro, a supervisor at the investment information section of Okasan Securities in Japan.
The data lifted the Chinese yuan and stocks and copper prices in Shanghai. Markets in Hong Kong and Australia were shut for the Easter break, aas were most European markets US stocks were lower as energy shares eased on falling oil prices and a profit warning by Boeing Co gave investors jitters before quarterly earnings that will offer insight on the health of some of the largest US companies.
Goldman Sachs, J.P. Morgan, Citigroup and General Electric will report results this week. "Earnings season started last week but we really dont get into the hot and heavy until this week," said Craig Peckham, equity trading strategist at Jefferies & Company in New York.
The market was also weighing a report the US Treasury has directed General Motors to prepare for a fast "surgical" bankruptcy if GM fails to reach agreement with bondholders to exchange about $28 billion in debt into equity and with the auto workers union on concessions.
GM shares were down more than 16 percent. Oil lost more than 5 percent at around $49.61 per barrel after the International Energy Agency deeply cut its forecast for oil demand, offsetting data showing Chinese crude imports rose to their second-highest level ever.
Despite mixed signals on Monday, hopes the global economic slump may be abating and some stability returning to the banking sector have helped to underpin a month-long recovery in stocks from 12-year closing lows hit in early March. "We are heading in the right direction," President Barack Obama said on Monday, after saying on Friday the US economy is showing "glimmers of hope."
Further evidence of the reality of that will come this week with US retail, housing and industrial production data. But some analysts see little hope of a meaningful rebound. "Im still very pessimistic about the prospects of any enduring recovery," said T.J. Marta, chief market strategist at Marta on the Markets, in Scotch Plains, New Jersey.
"In spite of the stabilisation, there is no sustainable upward trend in growth." China is planning a new economic stimulus package to boost consumption, the China Securities Journal reported, citing a senior official of the State Information Center, which is affiliated with the top planning agency.
In signs Beijings efforts are bearing fruit, new loans and money supply growth hit record highs in March. Industrial output grew 8.3 percent in March after a record low of 3.8 percent in the first two months of the year, Premier Wen Jiabao said over the weekend.
But all was not rosy for China, which needs economic growth of around 8 percent to keep its massive work force employed. An adviser to Chinas central bank said the economy was unlikely to hit bottom soon, while the Ministry of Finance said the outlook for fiscal revenue in the coming months was "not optimistic."
In Japan, the economic situation remained bleak. Wholesale prices are falling at their fastest rate since 2002, March figures showed, as weakening domestic demand on top of falling commodity prices drives Japan toward its second bout of deflation this decade.
With interest rates already near zero, analysts say the Bank of Japan has limited weapons. "If prices continue to slide, the BoJ may need to expand its government bond buying and move toward quantitative easing," said Norihiro Fujito, general manager at Mitsubishi UFJ Securities.