Geithner to host G7 and G20 meetings
WASHINGTON (Reuters) - U.S. efforts to stimulate the economy with infrastructure projects are "ahead of schedule and under budget," President Barack Obama said on Monday, while Goldman Sachs' earnings offered hope of a recovery in banking.
"The market is cheering, not so much that the banks are on the mend but that they are not going to die," said Les Satlow, portfolio manager of Cabot Money Management in Salem, Massachusetts. "My view is that a key crisis phase of this economic downturn is behind us."
Obama will give a "major" speech on the economy on Tuesday, the White House said. Federal Reserve Chairman Ben Bernanke is also due to speak about the financial crisis on Tuesday.
After the closing bell, Goldman Sachs (GS.N) beat forecasts by posting first-quarter earnings of $1.66 billion (1.1 billion pounds), helped by strong trading revenue.
Goldman said it planned to raise $5 billion of common shares and use the proceeds, plus additional funds, to repay the $10 billion of capital it got from the U.S. government under the Troubled Assets Relief Program. [nN13387020]
Despite the encouraging U.S. developments, data from China, Japan and India offered mixed signals as investors and analysts remained concerned about how quickly the global economy can bounce back.
Further evidence of the state of the U.S. economy will come this week with retail sales, housing and industrial production data. But some analysts see little hope of a meaningful rebound.
"I'm still very pessimistic about the prospects of any enduring recovery," said T.J. Marta, chief market strategist at Marta on the Markets, in Scotch Plains, New Jersey.
MORE G7 MEETINGS
Seeking a concerted escape from the worst crisis since the Great Depression, finance ministers from the Group of Seven leading nations will meet in Washington on April 24 and follow that with a Group of 20 ministerial session.
U.S. Treasury Secretary Timothy Geithner will host both meetings, which come just weeks after the G20 leaders' summit in London and before semi-annual gatherings of the International Monetary Fund and World Bank.
The G20 has agreed on a $1.1 trillion deal to fight the crisis, including a huge infusion of funds for the IMF. But differences persist over what steps should be taken to rebuild the financial sector, free up lending and boost economies.
In a key part of Obama's $787 billion stimulus plan, the United States is embarking on thousands of major infrastructure projects to create jobs and shore up highways, bridges and mass transit systems.
"This government effort is coming in ahead of schedule and under budget," said Obama, who has also pushed tax cuts and reforms of the healthcare and energy sectors. "It is now clear that day by day, project by project, we are making progress."
A jump in China's industrial output last month, along with a record rise in new lending, lent credence to the idea that the bottom of the crisis may not be far away and lifted the Chinese yuan and stocks in Shanghai.
But data showing a big fall in Japanese wholesale prices suggested the world's second-largest economy is sliding back towards deflation.
In India, a huge emerging market, the effects of the global downturn slowed economic growth to just below 7 percent in the 2008/09 fiscal year that ended in March, Prime Minister Manmohan Singh said.
BANKS CHEER U.S. INVESTORS
U.S. stocks .N cut losses, with the S&P 500 .SPX and Nasdaq .IXIC indices closing slightly higher as investors snapped up financial shares on hopes quarterly results of major banks will show stabilization returning to the sector.
The S&P financial index .GSPF rose 4.81 percent.
Besides Goldman Sachs, other U.S. heavyweights reporting results this week include JPMorgan (JPM.N), Citigroup (C.N), General Electric (GE.N) and Intel (INTC.O).
The Dow Jones industrial average .DJI slipped 0.32 percent after Boeing (BA.N) gave a gloomy profit forecast and slashed production, reviving investor worries.
The market was also weighing a report that the Treasury has told General Motors (GM.N) to prepare for a fast "surgical" bankruptcy if GM fails to reach agreement with bondholders to exchange about $28 billion in debt into equity and with the auto workers union on concessions.
GM shares fell more than 16 percent.
As GM rival Chrysler CBS.UL races to complete a partnership deal with Fiat (FIA.MI) to stave off bankruptcy, Automotive News reported the two companies are discussing a new management team and board for Chrysler.
Markets in Hong Kong and Australia were shut for the Easter break, as were most European markets.
Oil dropped nearly 4.3 percent to just above $50 per barrel after the International Energy Agency deeply cut its forecast for oil demand.
The dollar and yen both fell against the euro as a heartier appetite for risk eroded the safe-haven appeal of the U.S. and Japanese currencies. U.S. government bond prices rose as the Fed stepped up purchases of Treasury and agency debt.
China is planning a new economic stimulus package to boost consumption, the China Securities Journal reported, citing a senior official of the State Information Centre.
But an adviser to China's central bank said the economy was unlikely to hit bottom soon, while the Ministry of Finance said the outlook for fiscal revenue in the coming months was "not optimistic."
In Japan, the economic situation remained bleak. With interest rates already near zero, analysts say the Bank of Japan has limited weapons to hand.
"If prices continue to slide, the BOJ may need to expand its government bond buying and move towards quantitative easing," said Norihiro Fujito, general manager at Mitsubishi UFJ Securities.
(Reporting by Jason Subler in Beijing, Yuzo Saeki in Tokyo, Glenn Somerville and John Whitesides in Washington and Edward Krudy in New York; Editing by Dan Grebler)
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