Obama sees progress on crisis

President Barack Obama has tried to assure Americans his team's effort to revive the U.S. economy is starting to bear fruit just as Japan's crumbling exports underscored the depth of the world recession.

Obama's assurances followed his plea for more concerted action to tackle the global crisis and came just a day after Washington's plan to soak up toxic assets at the root of the global financial meltdown stoked a worldwide stock market rally.

The U.S. administration also sought more powers to wind down failed non-banking financial institutions to avoid costly bailouts in the future.

In an article published around the world on Tuesday, Obama called on leading economies to enact robust stimulus spending, repair credit markets and extend aid to poor countries when Group of 20 leaders meet in London late next week.

He also said Washington was prepared to spearhead this effort, doing its part to pull the world's biggest economy out of its deep 15-month old downturn. (http://www.whitehouse.gov/blog/09/03/24/A-time-for-global-actio n/) "We will recover from this recession. But it will take time, it will take patience," Obama said in the opening statement of his second prime-time White House news conference since he took office on Jan. 20.

"We've put in place a comprehensive strategy designed to attack this crisis on all fronts. It's a strategy to create jobs, to help responsible homeowners, to restart lending, and to grow our economy over the long-term. And we are beginning to see signs of progress."

U.S. officials have recently cited glimmers of improvement in a battered housing market, whose collapse set off the credit market meltdown and the worst global recession since the Great Depression of the 1930s.

Beijing has also been making encouraging comments about China's prospects and a central bank adviser joined on Wednesday a chorus of officials suggesting the world's third-biggest economy was bottoming out from a sharp slowdown late last year.

Yet most key economic indicators still suggest a long and painful recession for the U.S. and world economy and no near-term relief for export-dependent nations such as Japan.

The world's second-largest economy reported exports nearly halved in February from a year earlier, a record fall, and imports also tumbled, a sign both domestic consumption and demand from key U.S. and European markets were crumbling.

Adding to the gloom, a gauge of Japanese retail equity investors' sentiment based on a Reuters poll fell for the third straight month in March to its lowest reading since the survey began in January 2006.

Bank of Japan deputy governor Hirohide Yamaguchi acknowledged Japan suffered more than its peers and suggested the bank's near-term focus would be on stabilising markets and easing corporate funding strains.

In Europe, Germany's key business sentiment gauge, the Ifo index due at 0900 GMT on Wednesday, is expected to inch down in March, with its expectations component seen rising a notch, suggesting some stabilisation, albeit at very low levels.

NEW POWERS

Obama's high approval ratings have been tested by public outrage over payment of $165 million in executive bonuses by American International Group after the insurance giant was rescued with $180 billion in taxpayer bailout funds.

On Tuesday, his Treasury Secretary Timothy Geithner, backed by Federal Reserve Chairman Ben Bernanke, appealed to lawmakers to grant the government more power to intervene in troubled firms in order to avert AIG-style debacles in the future.

Obama took the podium after U.S. stocks slid while investors paused to reassess the government's plan to purge bank balance sheets of up to $1 trillion in troubled assets. Initial euphoria over the plan had driven U.S. stocks sharply higher on Monday.

Asian markets initially slipped on cue from Wall Street, but later pared losses with Tokyo's stocks ending barely changed and the rest of Asia-Pacific slightly positive.

The AIG furore distracted from Obama's effort to convince lawmakers and the public that his $787 billion economic stimulus package will jolt the economy out of recession and his record $3.55 trillion budget for fiscal 2010 will be money well spent.

Concerns that record fiscal deficits and the Fed's hefty liquidity injections will create a global glut of dollars, made the U.S. currency suffer its biggest weekly loss since 1985 last week and revived calls for an alternative world reserve currency.

But Obama brushed off such proposals recently brought up by China and Russia.

"I don't believe that there's a need for a global currency," he said, adding the dollar was "extraordinarily strong.

On Wednesday, the dollar dipped against the euro, but held on to most of the gains made the previous day on profit-taking after last week's slide.

Obama also played down fears of a U.S.-European rift on the world economic action plan, saying the G20 summit should be able to agree on common goals of spurring world growth, revamping financial regulations and avoiding trade protectionism.

European leaders have rejected U.S. pleas for more spending on top of the trillions of dollars governments have already pledged, fearing it would with many arguing the priority was to strengthen market regulation.

With several emerging economies in Europe and elsewhere among the hardest hit by the crisis, the International Monetary Fund revamped its lending operations and created a new credit line for well-run economies.