US job cuts and Far East woes cloud G20 hopes

Figures showed the decline in European manufacturing eased last month in a sign that green shoots of economic recovery could be emerging on the continent.

UK manufacturers also enjoyed a much-improved March as the weak pound boosted demand for British goods abroad. The purchasing managers index, which measures activity in the manufacturing sector, jumped from 34.9 in February to 39.1, although it remained below the 50 cut-off between expansion and contraction for the 11th month in a row.

But any hopes of a turnaround for the global economy were dashed by shocking figures from the US showing 742,000 workers lost their jobs last month as firms slash staff to cut costs.

Unemployment was also up in the eurozone in February to 8.5%, close to a three-year high, while retail sales in Germany unexpectedly fell 0.2%.

The scale of the task facing world leaders was further underlined by a collapse of business confidence in Japan, manufacturing woes in China, and sharp fall in exports in South Korea. US President Barack Obama said: "We can only meet this challenge together. All of us here in London have the responsibility to act with a sense of urgency."

City economists had warned that the improvement for UK manufacturers could be shortlived. Jonathan Loynes of Capital Economics said the March ump was "a welcome surprise but does not transform the picture of very weak conditions in the industrial sector".Howard Archer of Global Insight warned that "one swallow does not make a summer".

In Asia, the Bank of Japan said business confidence in the world's second-largest economy crashed to an all-time low in March after an unprecedented drop in demand for cars and gadgets at home and abroad. In China, the contraction in manufacturing, which accounts for about 40% of the world's third-biggest economy, worsened as the global downturn battered trade. South Korean exports also declined.

China president Hu Jintao saidthat "world countries should adopt economic stimulus steps suited to their conditions [and] reinforce co-ordination of their macroeconomic policies."

You get my vote, Darling gives thumbs-up to the Geithner plan

Alistair Darling signals his backing for American counterpart Timothy Geithner today ahead of the G20 summit. The Chancellor met the US Treasury Secretary at 10 Downing Street while Gordon Brown and Barack Obama held talks.

The UK and US want to present a united front at the meeting and played down talk of a rift between global leaders on how to tackle the economic crisis. President Obama praised Geithner's proposals for "as aggressive a set of regulatory measures as any that have emerged among G20 members".