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Global data points to recession easing
(Agencies)
Updated: 2009-05-05 08:28 WASHINGTON -- Better news on manufacturing in Europe, China and India, and positive signs on US home sales and construction raised hopes on Monday that the deepest economic slump in decades may have bottomed out. Manufacturing in Europe declined at its slowest pace in six months, and grew in China and India in April, while pending sales of existing US homes rose unexpectedly in March and US construction spending rose a slim 0.3 percent the same month, its first increase since September. A top US Federal Reserve official said the recession is fading and growth will resume later this year. "While overall activity is still contracting, it now appears as if the pace of contraction is diminishing, and at some point later this year, activity will bottom out and begin expanding again," Richmond Federal Reserve President Jeffrey Lacker said in a speech to business leaders.
The FTSEurofirst 300 index of top European shares had ended up 1.5 percent, its highest close since January 12, with oil and gas and industrial engineering among the top sectoral gainers. Fears of a deadly flu epidemic also eased, cheering investors. Mexico's peso currency soared and its stocks jumped after the government of the country hit worst by the flu said the worst of the illness had passed. Oil prices rose to their highest close of the year, above $54 a barrel, on hopes an easing of the recession will pave the way for a recover in world energy demand. 'Most Widespread Recession' The latest rays of hope were clouded by a warning from the European Commission that growth rates in the European economy will only turn modestly positive in the second half of 2010. "The European economy is in the midst of its deepest and most widespread recession in the post-war era," Economic and Monetary Affairs Commissioner Joaquin Almunia said after the Commission revised down its forecasts. "But the ambitious measures taken by governments and central banks in these exceptional circumstances are expected to put a floor under the fall in economic activity this year and enable a recovery next year," Almunia said in a statement. The China and India PMI data helped push Asian stocks to seven-month highs, also supported by the positive US data. US stocks were also fueled by investor hopes banks will be able to raise any capital they may need as a result of findings in the government stress tests. Results of the tests will be made public on Thursday. |
