The global economic downturn has recently shown signs of abating, U.S. Treasury Secretary Timothy Geithner said on Friday, and South Korea seemed to back that view by narrowly avoiding recession in the first quarter.
But there was enough evidence that the road to recovery from the world's worst economic slump in six decades would be long and painful, with downbeat U.S. jobs report and other economic data, mixed company results and persistent worries about banks' health.
Samsung Electronics, the world's top memory chip and LCD screen maker, reflected that sentiment, soundly beating forecasts with its quarterly profit but saying it was too early to bet on a pick up in consumer demand and the economy at large.
Britain was expected to show just a slight slowdown in economic contraction when it reports first quarter data at 0830 GMT, with economic output still seen shrinking by 1.5 percent.
The influential Ifo German business sentiment gauge, due half an hour earlier, was also seen inching up from a record low in March, but only thanks to improved expectations, with companies expected to further downgrade their view of current conditions.
Geithner, writing in the Financial Times ahead of meetings of G7 and G20 officials in Washington later on Friday, said there were signs of improvement in global markets and the world economy but that the 2009 outlook remained challenging.
"In recent weeks, there have been some encouraging signs that the global economic downturn may be slackening," he wrote. "Conditions in some financial markets have improved and the decline in world trade may be abating."
Geithner repeated Washington's call for more policy action on behalf of the world's leading economies to ensure lasting recovery.
The International Monetary Fund estimates that the world economy will shrink by 1.3 percent this year, in its worst recession since World War Two.
TEMPORARY REBOUND?
Bank of Japan Governor Masaaki Shirakawa, speaking on the eve of the Washington gathering of finance ministers and central bankers, offered a word of caution, saying officials should not fall for what still may be a temporary bounce and that restoring balance to markets and economies would take time.
"We need to be aware that policymakers are not omnipotent," he said in a speech in New York.
"The policy actions we have taken in the past 20 months are no substitute for the necessary unwinding of economic imbalances accumulated in the preceding booms."
Policymakers have sought to strike a fine balance in their recent comments between inspiring confidence in their actions and preventing too much optimism from undermining public support for more spending on fiscal stimulus and company bailouts.
The latest economic data and company news offered a similarly balanced fare and markets responded accordingly, with Asian stocks vacillating between gains and losses in choppy trade after Wall Street's 1 percent rise overnight.
The number of newly laid off U.S. workers rose last week and U.S. home sales fell last month, but South Korea's economy grew 0.1 percent in the first quarter after a disastrous fourth quarter.
In Beijing, a prominent government economist joined the chorus of officials talking up the world's third-largest economy, predicting a substantial upswing in the current quarter.
U.S. tech heavyweights Amazon.com and Microsoft as well as some smaller regional banks positively surprised markets with their earnings, while U.S. economic bellwether United Parcel Service disappointed.
Samsung also beat analysts' forecasts with its profits and sales, but its smaller rival Hynix Semiconductor Inc, the world's No. 2 memory chip maker, reported a sixth straight quarterly loss.
BANKING ANXIETY
There were also fresh signs of strain in the Japanese financial sector with reports that the country's biggest brokerage, Nomura and its smaller rival Daiwa would plunge deep into the red.
The news fed into a general sense of anxiety about the overall soundness of the financial sector ahead of the results of "stress tests" ordered by U.S. regulators to determine if banks had enough capital to withstand a deep recession.
U.S. banks including Bank of America Corp, JPMorgan Chase & Co and Wells Fargo & Co may need to raise $1 trillion of capital, Keefe, Bruyette and Woods analysts said in a report.
The process enters a critical phase on Friday, when regulators begin discussing their findings with banks, and the publication of results is due on May 4.
Investors were also reminded of the uncertain fate of the U.S. auto industry with news that the Chrysler LLC was preparing a bankruptcy plan with only a week left to clinch a life-saving deal with Italy's Fiat.
In a sign that not only investors, but also policymakers were nervous in the face of the worst crisis in generations, World Bank President Robert Zoellick warned nearly half of G20 nations were running foul of their own pledges to shun protectionism.
The bank's report said the United States, Brazil, Argentina, India, Russia, France, Britain, Germany and Italy were considering or have taken measures to restrict trade.
