US data sparks fresh hope worst maybe over

MUCH better-than-expected US industrial orders data boosted markets in the United States overnight, offering another sign that its stricken economy could finally be steadying after months of turmoil.

Orders for durable goods in February jumped 3.4 per cent, marking the first gain in six months, the best showing since December 2007 and trumping analyst forecasts for a fall of 2.4 per cent.

An equally surprising 4.7 per cent gain in US new home sales in January was taken as further evidence the world’s largest economy may have hit bottom, sending stocks sharply higher on Wall Street and reversing losses in Europe.

This week  week began on a strong note after Washington unveiled a widely welcomed bank bad-debt resolution package but fresh doubts over how companies will fare in the first half of this year prompted second thoughts.

Dealers said markets have been whip-lashed for months by hopes the crisis was ending only to find themselves back on the defensive when the latest unemployment or output data wrecked any optimism.

Timing the bottom of any downturn is virtually impossible but the markets always try to anticipate the turn and the US data, along with other recent figures, at least suggest the pace of decline is slowing.

On Wall Street, the Dow Jones Industrial Average was up 2.26 per cent at around 1500 GMT. In Europe, London was virtually flat, off early lows, while Frankfurt gained 1.19 per cent and Paris put on 1.09 per cent.

Earlier in Asia, Tokyo slipped 0.10 per cent and Hong Kong lost 2.07 per cent but Sydney was up 0.82 per cent.

Stressing the positive, US President Barack Obama told his crisis-weary nation ths week that he saw signs of economic progress but pleaded for “patience” in dealing with the worst slump since at least World War II.

“We’ll recover from this recession but it will take time, it will take patience,” Mr Obama said.

Senior US officials kept up the momentum today, with Treasury Secretary Timothy Geithner promising stronger rules against financial fraud and abuse.

“No crisis like this has a simple or single cause but as a nation we borrowed too much and let our financial system take on irresponsible levels of risk,” Geithner told a forum in Washington.

“In the coming weeks, we will take additional steps, among them, proposing new and stronger rules to protect American consumers and investors against financial fraud and abuse,” he said.

In Bucharest, the International Monetary Fund, the World Bank, the European Union and the European Bank for Reconstruction and Development signed a 20 billion euros ($A38.76 billion) two-year standby arrangement with Romania, whose economy has been badly hit by the global slump.

The accord, the fifth in the region after Hungary, Ukraine, Latvia and Serbia also sought help, will provide funds to get Romania through the crisis as it tries to keep its economy afloat while having to cut public spending.

Elsewhere on world markets, Europe was hit early today that business confidence in Germany, the continent’s largest economy, had slumped to a record low while the IMF and EU put together a 20 billion euros ($38.76 billion) rescue package for Romania.

Weak data out of Japan – where exports in February almost halved from a year earlier – added to the negative tone.

Japan’s problems as an export-dependent economy are writ large across Asia, where many countries, including China, are struggling as their overseas markets dry up. All hopes lie in the United States, their biggest customer.

“Japanese growth was exclusively dependent on exports,” said Professor Noriko Hama at Doshisha Business School in Kyoto.

“As the US is expected to be the first one out of the crisis, other economies will recover six months later, including Japan,” Mr Muramatsu said. –Agence France-Presse