Japan PM unveils $150bn stimulus

Japan has formally unveiled its record $150bn (£105bn) stimulus package as it seeks to revive its flagging economy.

Prime Minister Taro Aso said the plan - worth about 3% of its gross domestic product - aimed to protect livelihoods and to foster future growth.

The 15.4 trillion yen package includes measures to boost fuel-efficient vehicles and consumer electronics.

Japan's economy has been battered by a collapse in exports and is facing its deepest recession since World War II.

Japan's ruling coalition plans to put the stimulus package before parliament by the end of the month.

'Opportunity'

"We are implementing a resolute policy in the form of economic crisis measures in order to protect the livelihoods of the people," Mr Aso told a news conference.

"The first of our objectives is to prevent the economy from falling through the floor. Another objective is to give a sense of security to the people," he said.

This is the government's third stimulus plan in the past year. It comes on top of 12tn yen of spending in earlier packages, as well as tax breaks and cash handouts.

It also creates a financial safety net for temporary workers, boost struggling firms and support regional economies.

Mr Aso said the new steps would be partially funded by issuing new government bonds.

Japan has been worst-hit among advanced nations by the global economic downturn.

Its exports have halved amid an unprecedented collapse in worldwide demand for the cars and electronic gadgets the country produces.

The government has a long-term goal to shift the economy's focus from exports to domestic sectors poised for major growth.

It wants to be a world leader in energy efficient technology and to bolster care for its huge and growing elderly population.

The aim is to create as many as two million jobs in the next three years.

Shares higher

On Thursday, shares in Tokyo gained as details of the stimulus plan emerged.

Japan's benchmark Nikkei 225 index closed at a three-month high, rising 3.74% to finish at 8,916.06.

Shares in carmakers and solar power-related firms gained.

"This may contribute to GDP for a year," said Masamichi Adachi, an economist at JP Morgan. "The consequences over the longer term are negative as we are piling up more of a fiscal burden. Bond issuance will go up from here on."

The package came out as figures showed Japan's machinery orders unexpectedly rose in February thanks to gains in the services sector.

Obama sees 'hope' for US economy

US President Barack Obama has said he sees "glimmers of hope" in the economy, but warned that the system remained under "severe strain".

Speaking after a meeting with his top economic advisers, he said there was still "a lot of work to do".

Mr Obama promised more action on the economy in the coming weeks.

He said he and his team had discussed the stability of the financial system, the housing market and plans to help banks clear their books of bad assets.

'A lot of hardship'

Mr Obama was speaking after a meeting at the White House with top strategists including Treasury Secretary Timothy Geithner and Federal Reserve chief Ben Bernanke.

He told journalists afterwards: "We're starting to see progress.

"If we stick with it, if we don't flinch in the face of some difficulties, then I feel absolutely convinced that we are going to get this economy back on track."

The president cited increases in loans to small businesses, tax-cut cheques going out and new investments in infrastructure and energy projects as signs of hope for the economy.

But he added a note of caution, saying that the measures taken had to "translate into economic growth and jobs and rising income for the American people."

"And right now we're still seeing a lot of job losses, a lot of hardship, people finding themselves in some very difficult situations," he said.

"We still have a lot of work to do, and over the next several weeks you'll be seeing additional actions by the administration."

Oil jumps on strong share prices

The price of oil has risen sharply after big rises in US stock markets fuelled cautious optimism about the global economic outlook.

The price of US light crude rose $2.74, or 5.5%, to $52.12 a barrel. London Brent oil climbed $2.50 to $54.09.

The price rises were sparked by a sharp rally on Wall Street, where shares jumped by 2.9%, and by better than expected sales by leading US retailers.

Light trading in oil in the run up to Easter contributed to the sharp rise.

'Economic hope'

"A lot of little things are giving investors hope that maybe the economy has seen the worst," said Andrew Lebow at MF Global.

One of the biggest banks in the US, Wells Fargo, announced on Thursday that it expected to report record profits of $3bn (£2bn) for the first quarter of this year.

This drove shares on Wall Street higher.

Also on Thursday, The International Council of Shopping Centers (ICSC) announced that retail sales in March had fallen by 2.1% compared with a year earlier, less than many analysts had expected.

"People are buying oil when they see signs of economic hope," said Phil Lynn at Alaron Trading.

Banks drive US stocks up sharply

Big gains in banking stocks have pushed Wall Street sharply higher after one of the biggest banks in the US said it would make record profits this quarter.

Wells Fargo announced on Thursday it would make a profit of $3bn (£2bn) in the first three months of 2009.

The news sparked a significant bounce in financial stocks, led by Bank of America, which jumped 35%, and Wells Fargo itself, which climbed 32%.

As a result, the Dow Jones index rose 246 points, or 3.1%, to 8083.4.

'Record profits'

Other financial stocks also climbed sharply.

American Express closed up 19.8%, JP Morgan Chase climbed 19.4% and Citigroup gained 12.6%.

European markets also closed up, with the UK's FTSE 100 index rising 1.5%, Germany's Dax gaining 3.1% and France's Cac 40 climbing 1.8%.

The surge on Wall Street was largely down to the Wells Fargo announcement.

"The fact that Wells Fargo can have record profits despite the troubles facing the banking system tells you something. It's very good news," said Rick Campagna at 300 North Capital.

The troubles of the banking sector are seen as one of the root causes of the global economic downturn.

'Outstanding franchise'

Governments all over the world are focusing efforts to stimulate their economies on banks, primarily by trying to get them to start lending again.

Some banks have been nationalised, while governments have taken large stakes in others.

Investors were, therefore, delighted to hear that one of the biggest banks in the US is on course to record profitability.

Wells Fargo said it expected revenue of $20bn for the first quarter of this year, translating into "another quarter of double-digit revenue growth" of 16%.

Part of the strong performance was due to the bank's acquisition of Wachovia, which was the fourth-largest US bank, after it almost collapsed last year.

"Wachovia's outstanding franchise has proven to be everything we thought it would," Wells Fargo said.

Markets were also buoyed by better than expected March sales figures from some of the biggest retailers in the US.

The pressure is now on other banks to post strong results.

"I'm not sure everyone will be as successful, but we'd like to hope that the success will spill over," said Ted Aronson at Aronson-Johnson-Ortiz.

Some banks report results next week and, if they are weak, markets could fall back.