China's economy grew at its slowest rate on record in the first quarter, data on Thursday showed, but stocks rallied on hopes the financial crisis was beginning to loosen its grip on the global economy.
Confidence at companies in Japan remained near record low levels, according to a Reuters poll, and comments from major companies including retailer Wal-Mart and credit card issuer Capital One underscored how U.S. consumers are still struggling.
But earnings and forecasts from some companies offered glimmers of hope.
French food group Danone stuck to its 2009 earnings targets, while and Swiss drugmaker Roche Holding AG said it was confident of meeting its full-year sales growth target.
U.S. data also hinted at bottoming of the economic slump.
China's economy grew at 6.1 percent, its lowest rate since records began in 1992 and slower than the 6.3 percent expected by analysts.
"It's still an okay number which shows China is bottoming out," said Sebastien Barbe, senior economist at Calyon in Hong Kong. "The previous number was only slightly above this, so that means the deceleration is not so strong and the policy response — a lot of bank lending and investment by state-owned companies — is helping contain the slowdown."
(For a Graphic, click: http://graphics.thomsonreuters.com/apr09/CN_GDP0409.jpg)
Growth was hit by a sharp fall in January-March exports in, but was offset somewhat by the implementation of the government's 4 trillion yuan ($585 billion) stimulus package, which helped prompt a surge in lending in the first quarter.
Industrial and Commercial Bank of China (ICBC), the world's biggest lender by market value, lent more in the first quarter than in the whole of 2008, its chairman told Reuters on Thursday, predicting a rise in 2009 profits.
STOCKS STRONG
Shanghai's benchmark index slipped more than 1 percent after the GDP data, before clawing its way back into positive territory.
Asian stocks rose to their highest in six months before giving up some of their gains, having surged by more than a third since early March.
"The China GDP figures were basically used as a reason for investors to lock in profits, " said Hideyuki Ishiguro, a supervisor at the investment advisory section of Okasan Securities. "But not all the figures that came out were bad, with some suggesting we could start seeing an improvement next time. Plus this data could raise expectations of another Chinese economic stimulus plan."
Japan's Nikkei closed up 0.1 percent and MSCI's measure of stocks elsewhere in the Asia-Pacific region added about 0.7 percent.
A late rally on Wall Street on Wednesday lent support, helped by data on factory orders and housing that suggested the steep descent in the U.S. economy may be slowing despite falling consumer prices and industrial output in March.
"The bottom in terms of the economy is probably three or four months away. We're approaching it," said Nariman Behravesh, chief economist at IHS Global Insight.
"Businesses are getting a better handle on their inventories right now but that still means they're a few months away from actually restocking."
Companies have taken radical action to counter the slowdown, slashing production, cutting jobs and looking for other ways to ride it out.
With the semiconductor industry suffering its worst ever slump, Japan's NEC Electronics and Renesas Technology are in the final stages of merger talks, sources said, the latest sector shakeout forced by a huge chip glut and a slump in prices.
A combined company would be the world's No.3 chipmaker after Intel and Samsung Electronics, based on data from market research firm Gartner.
More insight will come from quarterly results at Nokia, JPMorgan Chase, Google and Carrefour on Thursday, while weekly U.S. jobless claims and March housing starts will give further economic clues.
