China added to the drip-feed of encouraging news on Monday with a top central banker saying the government's stimulus has worked better than expected and crude imports data showing a spike in demand.
Global stock markets have rallied in recent weeks on hopes the U.S. economy will start growing again later this year and that banks were getting back on their feet after the industry was caught in the worst financial crisis in six decades.
China, for years the world's factory floor, also plays a big part in the recovery scenario with many economies in Asia relying on Chinese demand and markets scrutinising Beijing's data for any signs of global demand bottoming out.
"China's economy is expected to sustain rapid growth for some period in the future," Deputy Central Bank Governor Su Ning told a financial conference.
Prime Minister Wen Jiabao pitched in, too, telling state radio that the government's response to the financial crisis went far beyond its $585 billion stimulus and suggested it would be rolling out new initiatives throughout the year.
RELIEF
There were also more encouraging signs from the United States and Europe on Friday, with the world's biggest economy shedding fewer jobs than feared and Germany's exports rising for the first time in six months in March.
Investors around the world also greeted with relief last week's results of stress tests of 19 biggest U.S. banks, with regulators ordering 10 of them to raise nearly $75 billion of capital — less than some analysts had estimated.
Su's comments coincided with Beijing's release of April price data that showed both consumer and producer prices kept falling last month. But markets saw the falls as a natural reaction to last year's surge in prices rather than a symptom of weakness of demand, with analysts predicting a return to moderate inflation in the second half of the year.
In yet another sign that China's industry was pulling out of a deep slump late in 2008 and early this year, crude oil imports in April jumped 13.6 percent from a year earlier, a source said. That was the first annual gain this year and the second-highest daily rate.
Chinese officials have sounded increasingly confident in the past weeks that the economy can regain traction and meet the government's 8 percent growth goal this year.
In a sign of growing optimism about the U.S. economy, an influential survey of private forecasters predicted it would resume growth in the third quarter and expand 1.9 percent next year after shrinking 2.8 percent in the whole of 2009.
The forecasts are more optimistic than the International Monetary Fund's latest outlook, which saw the U.S. economy stagnating next year.
CAUTION
But in a reminder that it would take months before the recovery would start feeling like one, the panellists surveyed in the Blue Chip Economic Indicators newsletter predicted that U.S. unemployment would only peak in the first quarter of 2010.
Warnings from European banks that their bad loans were rising and a steep $8.6 billion loss predicted by Toyota Motor Corp for this financial year also suggested the recovery would be slow and punctuated by weak earnings and data.
Global stocks and crude oil rallied in response to the U.S. jobs data and the long-awaited results of the U.S. banks' health check and Asian markets extended their winning streak on Monday.
But concerns that a 50 percent rally in Asia since early March made markets ripe for a pull-back limited Monday's gains.
The MSCI gauge of Asia-Pacific stocks outside Japan was up 1 percent by 0500 GMT, while Tokyo shares were barely changed, held down by Toyota's nearly 5 percent drop.
"It's hard to see where the good news will come from going forward," Calyon analysts said in a note.
"The worst is likely over from an economic standpoint, but less negative is far from positive."
U.S. Treasury Secretary Timothy Geithner struck a similar note of caution in an interview with Reuters Television saying fears of a catastrophic financial meltdown were waning, but there was still "a long way to go" before credit conditions could be considered normal.
