Signs of modest recovery in Japanese exports and a jump in U.S. consumer confidence boosted hopes the world is emerging from its worst financial crisis in decades, reigniting a rally in stocks and other riskier assets.
But the news was far from universally rosy, with General Motors Corp moving a step closer to the largest-ever U.S. industrial bankruptcy, and the head of the the world's largest miner, BHP Billiton, voicing doubts about the recent surge in demand for commodities, particularly from China.
The collapse of the U.S. housing market, which sowed the seeds of the financial crisis last year, also showed no signs of a turnaround. Prices of U.S. single-family homes fell 19.1 percent in the first quarter according to the Standard & Poor's/Case Shiller index, the most in the 21 year history of the survey.
But Japanese exports rose for a second month in April compared to the previous month, government data showed on Wednesday, as the world's second-largest economy recovers from its worst ever contraction.
"There are signs of recovery in exports due to progress in inventory correction overseas and a pickup in shipments to China," said Yoshiki Shinke, a senior economist at Dai-ichi Life Research Institute.
"Exports are likely to recover gradually from now on and the Japanese economy is expected to follow suit."
Shipments to China, Japan's biggest trade partner, fell 25.8 percent in April from a year earlier, narrowing the margin of decline for a third straight month and suggesting Beijing's $585 billion stimulus package is having an effect.
CONFIDENCE RETURNS
There was also evidence trillions of dollars in government spending were having an effect elsewhere.
Despite the ongoing housing slump and growing jobless numbers, confidence among U.S. consumers soared in May to its highest level in eight months, the Conference Board said.
Confidence among institutional investors also rose for the fifth straight month, hitting 106.3, the U.S. financial services company State Street said, adding to the sense that while the economy continues to contract, the pace of deterioration has abated.
The stronger data boosted major U.S. stock indexes by more than 2 percent on Tuesday, and Asian shares followed that lead on Wednesday.
Japan's Nikkei rose 1.5 percent in morning trade as the yen retreated against currencies seen likely to benefit quickest from economic improvement.
Stocks elsewhere in the Asia-Pacific rose almost 2 percent, with MSCI's regional index within striking distance of the seven-month high it hit last month.
In a further sign of increased appetite for risk, Australia and New Zealand Banking Group was raising $1.95 billion in a share sale, partly to fund a possible purchase of some of Royal Bank of Scotland's Asian assets.
The move illustrated a growing willingness of companies to seek opportunities rather than mere survival as the crisis eases, and the modest discount the new shares were offered at suggested investors were also become less fearful.
"It's a skinny discount, but it's enough. I think they'll get away with that," said Donald Williams, chief investment officer at Platypus Asset Management.
"There's a little bit more confidence out there about how the banks' books will play out in the next couple of months. The conditions are more stable."
But caution remained, with uncertainty surrounding the fate of GM an ongoing drag on sentiment.
The No.1 U.S. automaker has failed to persuade enough bondholders to accept a debt-for-equity swap, making a bankruptcy filing increasingly likely.
And BHP's Marius Kloppers said China's current build-up of commodity stocks did not entirely reflect underlying demand and was tied to China's massive $587 billion economic stimulus package announced late last year.
"Importantly, in the medium term we don't expect a sharp rebound in overall economic activity; in fact, we probably believe that economic recovery will be both slow and protracted," Kloppers told a conference in the Australian capital, Canberra.
