Hints of hope amid gloom as G20 leaders gather

The global economy showed more signs of weakness, but there were hints of hope as leaders of rich and emerging nations gathered in London yesterday for crisis talks, as a protester was reported dead by the police.

Data from purchasing managers' indexes showed US, euro zone and British manufacturing inched away from February's lows but remained in negative territory. A US index of pending home sales rose more than expected.

The numbers hinted at improvement but still pointed to further sharp contraction for European economies, and leaders of the Group of 20 (G20) nations had plenty of other evidence of the worst downturn since the 1930s.

US President Barack Obama said there was "enormous consensus" among the world's largest developed and emerging economies on plans to haul the world out of the deepest recession since the 1930s.

"The core notion that government has to take some steps to deal with a contracting global market place and that we should be promoting growth - that's not in dispute," Mr Obama told a news conference. He spoke after French President Nicolas Sarkozy said he would not go along with "false compromises" and won support from German Chancellor Angela Merkel.

"There are a few spots where we can have hope," said Juergen Michels, an economist at Citigroup in London. "But for the time being it's all hope. There are no clear signals that the recession will end any time soon."

The human cost of the crisis was underscored by eurozone figures that showed unemployment jumped more than expected to 8.5 per cent in February, while US private sector job losses accelerated in March to 742,000 jobs from a revised 706,000 in February.

As government leaders met, demonstrators clashed with riot police and smashed bank windows in Britain's financial centre in protest against a system they said robbed the poor to benefit the rich.

Hundreds of protesters converged on a branch of the Royal Bank of Scotland, shattering windows. Rescued by the government in October, RBS has become a lightning rod for public anger over banker excess blamed for the crisis.

Last night the police reported that a man died during anti-capitalist protests in front of the Bank of England, in the financial district of London.

London ambulance service medics took the man, who had stopped breathing, to a nearby hospital where he was pronounced dead. Reuters photographers said they saw a man who appeared to have collapsed being put into an ambulance.

Washington is pushing hard for governments to pump more money into economic stimulus programs. But France and Germany say they do not want this to distract from the need to regulate and rein in financial market excess.

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 of domestic and foreign demand. China's manufacturing sector saw a tentative improvement falter in March, although a survey pointed to signs the worst might be over there.

Hints of improvement in some areas were met with the likelihood of deteriorating performances in others. The International Monetary Fund predicted the global economy could contract by between 0.5 per cent and one per cent this year.

IMF managing director Dom-inique 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.

World stocks kicked off the new quarter with strong gains in Japan. After a weak start in Europe and on Wall Street, they turned around on the better-than-expected US factory news and a pending home sales report. The Dow Jones Industrial average rose by 1 per cent near midday, while the FTSEurofirst index of 300 leading European stocks was up 1.4 per cent.

Oil fell below $48, down nearly four per cent, as US crude inventories climbed to a 16-year high.

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.