Hopes for recession turnaround take a hit

A grim forecast for East Asia and news of a deeper than feared recession in the eurozone unsettled investors Tuesday and revived fears the current downturn has longer to run.
Following a World Bank report that East Asia would see a sharp drop in growth this year, preventing millions from escaping poverty, there was a spate of disappointing data from Europe.
British manufacturing output recorded its largest annual decline in 28 years, 13.8 percent, in February, when it fell for the 12th straight month.
The Eurostat statistics agency said the 16-nation eurozone suffered a 1.6 percent contraction in fourth quarter 2008, a weaker performance that the 1.5 percent reported in March.
"The negative European GDP numbers were worse than expected," said Manus Cranny, markets commentator at MF Global Spreads in London.
"They are a stark reminder that 2009-2010 is going to be an incredibly tough year."
Near the half-way stage in Europe, the London market had fallen 1.84 percent, Frankfurt 1.21 percent and Paris 1.52 percent. All three wiped out earlier gains.
"Worryingly, it is far from inconceivable that the eurozone GDP contraction was even deeper in the first quarter of 2008, given largely dire data and survey evidence," warned IHS Global Insight economist Howard Archer.
The World Bank in another study meanwhile forecast that Ukraine's economy would shrink 9.0 percent this year and warned that government mishandling of anti-crisis measures could make things even worse.
The ratings agency Fitch said it had placed the long- and short-term debt ratings of another former Soviet state, Georgia, on its negative watch list.
The agency warned that domestic political tensions could hamper efforts to boost confidence and revive momentum despite substantial international financial aid.
In Ireland, the first eurozone economy to fall into recession, the government was to unveil an emergency budget to counter a double-digit unemployment rate and prospects for a 6.75 percent growth contraction this year.
Prime Minister Brian Cowen has said the budget, including tax hikes and spending cuts, will be only a first step on a painful austerity path.
"There is no silver bullet ... that solves the problem overnight," warned Cowen.
Asian markets closed mostly lower on Tuesday as investors took profits from a four-week rally following an overnight slide on Wall Street.
Tokyo lost 0.28 percent, Hong Kong 0.46 and Sydney 1.34 percent as the region's dealers decided to ease up from a buying spree that has lasted since the beginning of March. Singapore gave up 2.47 percent.