(For full crisis coverage, double click on [nCRISIS])
* Chrysler files for bankruptcy, signs deal with Fiat
* Obama says U.S. automakers "going to come back"
* Surveys back up Fed assessment that recession easing
* BoJ improves crisis outlook but cuts year GDP view
* Global stocks log big gains for April despite flu threat
(Updates markets to close)
By Ros Krasny and Leika Kihara
CHICAGO/TOKYO, April 30 Chrysler filed for
bankruptcy protection on Thursday, the first such move by a
major U.S. automaker, taking the shine off fresh hints the U.S.
and global downturns may be moderating.
But a widening of the swine flu outbreak mostly failed to
subdue investors, who saw signs of an economic rebirth in a
drop in U.S. jobless claims, upbeat reports from the American
heartland and better-than-expected corporate profits.
Chrysler [CBS.UL], which makes iconic brands such as Jeep
and Dodge, filed for bankruptcy in New York and announced an
industry-changing deal with Italy's Fiat FIA.MI after weeks
of talks to restructure its debt broke down. [nLU940906]
"It's a partnership that will give Chrysler a chance not
only to survive but to thrive in a global auto industry," U.S
President Barack Obama said.
Both Chrysler and General Motors (GM.N), its larger and
also struggling rival, "are going to come back," Obama said.
Some analysts warned the ripple effect of bankruptcy at
Chrysler, as well as broader auto industry woes, could
undermine the nascent U.S. recovery.
"It will create a great deal of uncertainty for the
industry and suppliers," said Bill Kohlder, co-chair of Butzel
Long's Global Automotive Practice.
Jitters about the auto news turned around the U.S. stock
market from morning highs but major indices still finished out
the month with big gains. [MKTS/GLOB]
The number of U.S. workers filing new claims for jobless
benefits unexpectedly fell in the latest week by 14,000 to a
still-high 631,000. [nN30506091]
The data, taken with a slightly more robust employment
reading from Germany and an improvement in Japan's industrial
output for the first time in six months, helped to brighten
global stock market sentiment.
"The cumulative weight of the evidence over the last
several weeks is that the economy is moving closer to a
trough," said David Resler, chief economist at Nomura
securities in New York.
That view, reflected in the U.S. Federal Reserve's
statement after its policy meeting this week, was backed up by
the Chicago purchasing managers report. [nN30512933]
The Chicago index jumped unexpectedly to its highest level
since September and its upbeat tone was mirrored in regional
surveys from Milwaukee and Kansas City. [nWEQ000938]
"At the least, the industrial economy is transitioning from
meltdown to a more normal downturn," said Ian Shepherdson,
chief U.S. economist with High Frequency Economics in Valhalla,
Policy-makers have started to acknowledge a more positive
tone in economic data.
The Bank of Japan joined the Fed in offering a more
optimistic view of the global economy, helping markets to
offset worse-than-expected job losses in Europe. [nT277157]
"The Japanese economy is moving in a desirable direction
and is likely to recover gradually in the second half of fiscal
2009/10," BoJ Governor Masaaki Shirakawa said.
Still, the BoJ said Japan's economy was now expected to
shrink by 3.1 percent in the year to March 2010, sharper than
its previous forecast of a 2 percent contraction.
In Europe, where Germany forecast an annual contraction of
6 percent on Wednesday, European Central Bank Governing Council
member Ewald Nowotny also offered optimism. [nLU092241]
"I do indeed see green shoots for the European economy,
although the general perspective is of course that we will have
negative growth rates in 2009," Nowotny said. "I do see
perspectives for a positive development in 2010."
Similar comments came from Christina Romer, a top adviser
to Obama, who said she saw glimmers of hope the U.S. economy
was stabilizing but that it was still "hard to know" if a
recovery would start this year. [nN30510749]
MEXICO'S ECONOMY HIT
In the United States, the broad S&P 500 stock index .SPX
posted a 9.3 percent gain for April, its largest monthly rise
since March 2000.
The MSCI's all-country stocks index .MIWD00000PUS was on
course for a 12 percent rise for April, the biggest monthly
gain in its 20-year history.
"The downside momentum is slowing. That is what the leading
indicators are telling us, be it in the U.S. or the euro zone,"
said Michael Klawitter, senior foreign exchange strategist at
Dresdner Kleinwort in Frankfurt.
"Despite the discussion of swine flu, the market no longer
sees this as an economic risk."
That was not the case for Mexico, the country worst hit by
the new flu strain with up to 176 deaths. President Felipe
Calderon told his people to stay home from Friday for a
five-day partial shutdown of the economy. [nSP370581]
Mexico's central bank warned the outbreak could deepen the
nation's recession, hurting an economy that has already shrunk
by as much as 8 percent in the first quarter. [nN30198214]
The World Health Organization has declared the world is on
the brink of a pandemic. Eleven countries have reported
confirmed cases of the H1N1 strain, with the Netherlands the
latest to join the list.
The International Monetary Fund's chief economist warned
that some countries could see a "quite drastic" impact from the
(Reporting by Reuters correspondents worldwide; Writing by
Veronica Brown and Ros Krasny; Editing by John O'Callaghan)