German business sentiment posted a surprise rise this month, a survey from Europe's biggest economy showed yesterday, offering a glimmer of optimism in a global crisis which prompted Japan to extend aid to small companies.
Japan said it would offer a lifeline to the small- and medium-sized companies at the heart of the world's second-largest economy with a €12.6 billion fund to buy stakes.
Tokyo has already committed funds to help banks and spur lending but unpopular Prime Minister Taro Aso's ruling bloc is under pressure to do more ahead of an election which must be held by October.
"In light of the looming election, the government needs to help companies that are bleeding losses," said Hiromichi Shirakawa, chief economist at Credit Suisse in Tokyo.
In Russia, sources told Reuters that the government was set to help top bank Sberbank and other lenders with a second bailout package worth more than €20.4 billion.
One government source said Russia planned to offer Sberbank a 500 billion roubles subordinated loan.
In the US, Timothy Geithner, confirmed as treasury secretary on Monday, vowed to act swiftly to rescue the world's largest economy from the worst financial crisis since the Great Depression. He plans to overhaul the €530 billion financial rescue programme and is expected to propose new steps to unclog credit markets in the next two weeks.
German corporate sentiment defied fears it would dip to a new post-reunification low for this month, Ifo's monthly poll of around 7,000 firms showed.
Despite weakening demand and production cuts, the Munich-based economic think tank said the business climate index rose to 83.0, up from 82.7 last month and topping the 81.3 expected by 50 economists polled by Reuters.
German conglomerate Siemens yesterday posted an 81 per cent drop in quarterly net profit but even that beat analyst forecasts. It said its targets this year had grown "more ambitious".
The Japanese economy is struggling with its first recession in seven years. December exports were down by more than a third and business sentiment was at a record low.
Bank of Japan minutes yesterday showed that most of its policy board members thought its key interest rate of 0.1 per cent was the lowest possible level allowing money markets to function.
India's central bank left its ċkey short-term interest rates unchanged at a policy review yesterday so as to assess the impact of its recent aggressive easings, but cut its growth forecast for the fiscal year ending in March.