U.S. numbers hopeful, Asia grows cautious on stimulus
TOKYO (Reuters) - U.S. and European data and company results offered hope the global recession had eased but still showed the West lagging Asia, where two major central banks flagged the need to rein in emergency stimulus.
After a mixed bag of numbers on both sides of the Atlantic this week, one of the earliest signposts to U.S. industry showed the factory sector in New York state nearly pulled out of contraction in July, the highest reading in more than a year.
European car sales also showed a first monthly increase in over a year thanks to incentives for scrapping cars in some major economies, though analysts cautioned that was also thanks to disastrous numbers a year earlier.
But despite signs that Britain's recession may have bottomed out, data on Wednesday showed unemployment hit its highest point since January 1997 in the three months to May.
Boosted by strong corporate results, world stock markets gained for a third day, yet markets were still far from convinced that the West is on a firm path to recovery from the deepest recession in decades.
"The market is prepared to shake off weak economic data, preferring to focus on consensus-breaking results and upbeat outlooks from corporates," said Henk Potts, equity strategist at Barclays Stockbrokers.
The outlook for the Asian economy is more upbeat.
The Bank of Japan on Wednesday extended its crisis funding support for businesses for another three months, but Governor Masaaki Shirakawa said improvements in markets had led it to stop short of a six-month extension into the new year.
China's central bank also signalled concern over the amount of money coursing through its economy, taking the latest of a series of small steps to tighten policy by telling banks they would have to buy special bills in September.
"Financial conditions are improving as a trend. But at present, we decided it was appropriate to maintain the steps," Shirakawa told a news conference.
"If conditions improve further, it might be appropriate to end or review the various steps at the end of the year."
OUTLOOK SPLIT
Many hopes for a global revival have centred on China, where lavish government stimulus spending appears to be having the desired effect on an economy clobbered by a drop-off in trade as the developed world slid into recession last year.
A Reuters poll on Wednesday suggested the world's third-largest economy was on track to reach its 8 percent target for growth this year, while Asia's worst hit economies Singapore and Taiwan would see a sharp turnaround in 2010.
"We have already seen a fair bit of buying into risk over the past few weeks and people are feeling a bit better about the economy," said Chris Kimber, client adviser at Bell Potter Securities in Australia. Continued...
