Improved consumer sentiment in the euro zone's two biggest economies offered new signs on Tuesday the worst of the recession may have passed, with data from export-driven Germany pointing to economic stabilisation. A detailed breakdown of first-quarter German GDP revealed a sharp decline in investment and a collapse in exports, with firms initially caught out by a huge drop in demand and mounting stockpiles of unwanted goods in the country's biggest economic contraction since reunification.
Analysts said the figures appeared to mark a turning point. Carsten Brzeski of ING Financial Markets said: "The only good thing about today's GDP numbers is that they can now be filed away. It can only get better.
"Recent indicators give hope that the worst is behind and that the free fall of the German is coming to an end. The German economy should stabilise in the next quarters backed by the ECB's aggressive monetary easing the government's stimulus package."
The closely-watched GfK consumer sentiment index held steady in June for the third month. GfK's forward-looking index, based on a survey of 2,000 Germans, showed growing worries over household finances being offset by a brighter overall outlook.
Spending by French shoppers on manufactured goods also came in stronger than expected in April though analysts believe growing numbers of jobless in France could start to weigh on consumption.
National statistics office INSEE said consumer spending in April rose by 0.7 percent on March, beating median expectations for a 0.1 percent fall.
Nick Kounis, Chief European Economist for Fortis Bank, said: "This is stronger than expected. A lot of it is driven by soaring car sales, but there are other areas of strength in there as well."
Concerns about the effect mounting unemployment cast some doubt on the extent of any bottoming out in the global economy. Norway's Labour Authority NAV predicted a 3.1 percent rise in annual unemployment and 4.4 percent next year.
In Sweden, the jobless rate was unchanged at 8.3 percent but the numbers of hours worked fell 3.2 percent when adjusted for public holidays.
Olle Holmgren of SEB said: "There isn't much that indicates that it's about to turn around. Redundancy notices have come down a little bit, but from a very high level. There are other indicators for the job market that have worsened in the last month, for example the number of new jobs."
Companies continued to grapple with ways of tackling the economic downturn. Global miner Rio Tinto Ltd agreed a 33 percent cut in iron ore prices with Japan's Nippon Steel Corp, setting a tough benchmark for China's embattled steelmakers who had been looking for a bigger cut.
The long overdue settlement for contracts beginning from April will bring some certainty to both miners and mills, which have been in deadlocked talks as demand for both steel and its main raw material collapses in the wake of a global recession.
In North America, union leaders from General Motors will gather to hear how many more jobs will be cut at the embattled automaker.
Governments around the world have announced trillions of dollars in support for both consumers and businesses, racking up huge deficits in the process.
In a further stimulus move, Japan said on Tuesday it would channel around $3 billion in new loans through a government-affiliated bank to small Japanese firms operating overseas.
STOCKS STALLED
Optimism about a recovery in the global economy and better-than-expected earnings for the first quarter have helped propel a sharp rally in equities from their March lows.
Stocks have stalled since hitting 2009 highs last week amid concerns about the speed and strength of the recovery and tensions about North Korea's latest nuclear test.
Japan's benchmark Nikkei was down 0.5 percent, while stocks elsewhere in the Asia-Pacific eased 0.3 percent after jumping more than 50 percent since March.
"The economies of both the United States and China aren't just going to surge rapidly upwards, and what we're seeing today is probably a bit of a reality check," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.
Shares of Rio Tinto rose 1 percent after it announced its long-awaited iron ore contract deal with Japan's Nippon Steel, a smaller price cut than some analysts had expected.
