Signs of an uptick in demand are emerging in the United States and Japan after the sharpest downturn in decades, prompting companies to revive production and investors to buy shares.
Economic data has slowly started to improve, partly spurred by trillions of dollars in government stimulus spending, although doubts remain as to the sustainability of any recovery.
Jobless numbers around the world are growing, deficits are swelling and the number of companies facing bankruptcy is rising.
General Motors Corp remained on track to file for Chapter 11 bankruptcy protection within days, despite persuading major bondholders to accept a sweetened ownership plan on Thursday.
The revised deal is expected to result in a smoother and quicker ride through bankruptcy for the No.1 U.S. automaker.
JAPANESE FACTORIES RAMP UP
But there was some evidence the world economy may finally be finding a bottom.
Japanese factory output jumped in April and manufacturers forecast further gains ahead, Friday data showed, while April orders for U.S. durable goods rose by the most in 16 months.
The 5.2 percent monthly rise in Japanese industrial output, the biggest since 1953, was much greater than expected and hinted that final demand rather than restocking of depleted inventories was behind the rise.
Other figures showed household spending sliding and unemployment at a 5-½ year high, however.
"Overall demand is better than expected and likely to continue to grow this fiscal year due to government stimulus, but in the next fiscal year, after the stimulus fades, industrial output may stagnate," said Yasuo Yamamoto, senior economist, Mizuho Research Institute.
In a move that supported the stronger output data, Toshiba Corp planned to raise its production of computer chips to a level it was before cuts began in January, Japanese public broadcaster NHK reported on Friday.
Falling inventories and signs of a recovery in overseas demand for chips used in mobile phones were prompting the increase, planned for July, NHK said.
ASIAN STOCKS RISE
Shares in Toshiba rose, as did most Asian stocks, following gains of at least 1 percent in major Wall Street indexes overnight.
Tokyo's Nikkei stalled after hitting a technical resistance level, but MSCI's measure of other Asia-Pacific stocks rose 0.5 percent to its highest since October last year.
Shipping companies outperformed after the Baltic Exchange's main sea freight index, which measures the cost of transporting resources such as coal and iron ore, rose to an eight month high on Thursday.
Energy stocks also rose after oil prices jumped above $65 a barrel on Thursday after OPEC agreed to keep production targets unchanged.
Industrial demand has pumped up commodity prices across the board in recent weeks, with the Reuters-Jefferies CRB index up 12 percent in May and on its way to the biggest monthly gain since July 1974.
But other indicators remained weak.
Sales of newly built U.S. single-family homes rose slightly less than expected in April, and figures for March were revised down.
Underscoring the depth of the crisis in the industry that triggered the global economic slump, one out of eight U.S. households with a mortgage was late on loan payments or in the foreclosure process as of March 31, the U.S. Mortgage Bankers Association said, as the country grappled with its highest unemployment rate in more than a quarter century.
"The housing market depends on the unemployment situation, and we don't expect unemployment to bottom out until the middle of next year, so then normally housing would not recover until after employment recovers," said Jay Brinkmann, the association's chief economist.
