* Euro zone PMI hints at stabilisation
* Japanese business confidence hits record low
* Sarkozy says no G20 agreements reached yet
* General Motors sees growing chance of bankruptcy filing (For more on the global financial crisis, click
By Nigel Davies and Brian Love
LONDON, April 1 (Reuters) - The decline in European manufacturing eased in March, hinting the worst could be over for euro zone industry as leaders of rich and emerging nations gathered in London on Wednesday for crisis talks.
Data from the Markit Eurozone Manufacturing purchasing managers' index was buoyed by Germany, Europe's biggest economy, and France that showed tentative indications of stabilisation.
"Rates of decline in new orders and manufacturing output eased considerably in the euro zone during March, particularly in Germany and France, fuelling hopes that we are over the worst in terms of rates of contraction," said Chris Williamson, chief economist at Markit.
But the data still pointed to another sharp contraction for the euro zone economy and leaders of the Group of 20 (G20) nations gathering had plenty of other evidence the global economy remained mired in its worst crisis since the 1930s.
London also faced big protests from anti-capitalist, anti-war and climate protesters launching separate demonstrations that threatened to bring the financial heart of the city to a halt.
On the economic front, Japanese business confidence hit a new low in March, the central bank's tankan sentiment survey showed, with companies saying they faced a collapse in domestic and foreign demand.
China's manufacturing sector saw its tentative improvement falter in March, although a survey pointed to signs the worst might be over there, too.
Hints of improvement did little to dispel an overall mood of crisis, with the International Monetary Fund (IMF) predicting the global economy could contract by between 0.5 and 1 percent this year.
IMF Managing Director Dominique Strauss-Kahn told the Spanish newspaper El Pais he believed if the right economic policies were followed the global economy could begin to recover in the first two quarters of 2010.
OBAMA PUSHES STIMULUS
Washington is pushing hard for other governments to pump more money into their economic stimulus programmes, but Germany and France were pressing their demands for greater regulation and efforts to rein in financial market excess. French President Nicolas Sarkozy, due to meet German Chancellor Angela Merkel in London during the afternoon, set a combative tone in Paris before heading for the summit.
"I will not associate myself with a summit that would end with a communique made of false compromises that would not tackle the issues that concern us," he told Europe 1 radio in an interview. "As of today, there is no firm agreement in place."
British Prime Minister Gordon Brown, host of Thursday's summit in east London's Docklands district, said good progress had been made towards deals on boosting global trade and financial regulation, and stimulating growth and job creation.
U.S President Barack Obama, on the first major foreign tour of his presidency, was meeting Russian President Dmitry Medvedev and China's Hu Jintao, among others, before the G20 leaders meet Queen Elizabeth at Buckingham Palace in the evening.
WORLD STOCKS MIXED
World stocks kicked off the new quarter with strong gains in Japan but sharp losses in Europe after registering their best monthly performance since December 1999.
Investors were firmly focused on the G20 meeting, looking for confirmation there would be coordinated efforts to ward off a prolonged slump in world economic growth.
"The danger is that the outcome vastly disappoints the hype," Gary Dugan, chief investment officer of Merrill Lynch Global Wealth Management, said in a preview note.
Japan's Nikkei, which contains major Japanese automakers, gained 3 percent, but the mood in Europe was more sombre with the pan-European FTSEurofirst 300 index of top shares down 0.75 percent at 0940 GMT.
The dollar was supported by uncertainty over the fate of U.S. carmakers, following Tuesday's warning from General Motors there was a rising chance it could file for bankruptcy by June as it tries to cut its debt load.
Data later on Wednesday is expected to show U.S. auto sales fell 40 percent in March from a year ago as recession-hit consumers cut back on spending.
GM has been given another 60 days to come up with a way to become competitive again, while smaller rival Chrysler has been given a 30-day deadline to reach a deal with Italian carmaker Fiat SpA. (Additional reporting by Alan Wheatley in BEIJING and Kate Kelland in LONDON; Writing by Malcolm Davidson; Editing by Sue Thomas)