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TOPWRAP 5-U.S. signals push on stimulus; China growth surges

Published 07/16/2009, 08:53 AM
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* Geithner signals U.S. to keep pushing for global stimulus

* China Q2 growth quickens, 8 percent 2009 goal in sight

* U.S. jobs data stronger than forecast

* JPMorgan profits stronger than forecast

(For more on the global crisis, click)

By Anna Willard and Simon Rabinovitch

PARIS/BEIJING, July 16 (Reuters) - Washington signalled on Thursday it will keep pushing for global efforts to boost economies out of recession after China announced a rebound in growth, feeding hopes it might lead the way to recovery.

China's surprisingly strong growth of 7.9 percent in the second quarter, fuelled by state spending and bank lending, makes it the best-performing major economy and reinforces hopes it may lead the world out of its deepest recession in 80 years.

A business survey in Japan, Asia's older economic powerhouse, was more ambivalent but gave some support to news from companies around the world on Thursday suggesting demand for goods was picking up after months of official efforts to pump money into the world economy.

European shares extended gains on Thursday after U.S. banking giant JPMorgan released better than expected second quarter results.

Stock markets got a further boost from data showing the number of U.S. workers filing new claims for jobless benefits fell sharply last week to the lowest level since January, although officials cautioned that an unusual pattern of automotive industry layoffs amplified the drop.

In Paris, U.S. Treasury Secretary Timothy Geithner said he saw signs of durable confidence returning to the U.S. financial system.

"We are not going to repeat the mistakes of the 1930s," he said. "Our basic challenge is to keep working with governments around the world to provide enough support ... We're not going to have a sustained global recovery unless we have banks that are able to provide the credit for businesses and households to meet their needs," he told Bloomberg television.

He declined to be drawn on the fate of CIT Group Inc, a lender to hundreds of thousands of small and mid-sized U.S. businesses which said on Wednesday that bailout talks with the government had ended, a development that could ultimately drive the company into bankruptcy.

TRAINS, TVs

Encouraging data from the United States and Europe and upbeat corporate earnings announcements in recent days have revived optimism that the recession is abating, driving up Asian stocks for a third day on Thursday.

In China, a slew of data for June depicted an economy successfully making up for a slump in exports through domestic demand.

(For a graphic of the data, click on: http://graphics.thomsonreuters.com/079/CN_GDP0709.jpg)

"It's very encouraging, the 8 percent (official) growth target is in sight," said Daniel Soh, an economist at Forecast in Singapore. "It's by now clear that the fiscal stimulus package has offset the contraction in export activity."

The 8 percent growth target is the minimum the Communist Party deems necessary to hold down unemployment. China has poured 4 trillion yuan ($585 billion) into the economy and state prompting has pushed bank lending to record levels.

In Japan, a Reuters poll showed manufacturers' confidence has improved for four months in a row as exports and industrial output picked up, but the mood among services firms has slipped back to near a record low.

Japan's Nikkei rose 0.8 percent, while MSCI's index of shares elsewhere in Asia Pacific was up 1.3 percent after touching its highest level since mid-June.

In signs of recovery, French engineering group Alstom said first-quarter sales rose 7 percent to 4.8 billion euros ($6.74 billion), just missing analysts' forecasts, while its order intake "remained robust".

The maker of power stations and high-speed trains said it expected demand for rail transportation to remain strong in the short term, driven by large projects, some of which are linked to government stimulus packages.

South Korea's LG Display returned to a quarterly profit after two straight quarters of losses, spurred by robust demand for flat-screen TVs and strong LCD panel prices due to shortages of key inputs.

Electrolux AB, the world's second-biggest home appliances maker, posted a surprise rise in second-quarter core profit, lifting its shares. However, it still expected demand to fall this year. (Writing by Ruth Pitchford; editing by William Hardy)

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