Asian stocks pulled back from a six-month high on Thursday, while the safe-haven yen gained after China posted its slowest ever quarterly growth in a signal of the frailty of the global economy.
A day after a mixed set of economic data from the United States, it was China's turn, saying its economy grew a slower-than-expected 6.1 percent in the first quarter, but posting other data, such as industrial output, that signaled some optimism.
After an impressive month-long rally in global equities investors still appear conflicted between seeing glimmers of hope that the world economic downturn is showing signs of easing and other indicators that point to more pain ahead.
Riskier assets, such as oil, also pared gains but not by too much, helped as well by speculation that China could implement a new stimulus package reinforced hopes that policy maker worldwide are in battle mode amidst the worst global downturn in decades.
Central bankers are cutting interest rates and flooding liquidity into financial systems, further reinforcing some of these hopes.
No doubt China has felt the ramifications of the global crisis and growth has moderated, but the economy is showing signs of stabilizing and we can expect a recovery in the second half, said Su-Lin ong, a senior economist at RBC Capital Markets in Sydney.
The MSCI index of Asia-Pacific stocks outside Japan gained 0.8 percent as of 0245 GMT. The index had gained as much as 2.1 percent earlier in the day that brought it to its highest since October 15.
Contributing to the reversal, indexes in Hong Kong erased earlier gains to edge lower, while shares in Shanghai were down 0.5 percent.
However, other major indexes maintained their strength, with South Korea and Taiwan up nearly 2 percent each.
Japan's Nikkei average was up 2.9 percent.
Contradictory signals are also afflicting the U.S. economy.
On Wednesday, data showed U.S. consumer prices in March posted their first 12-month drop in nearly 54 years, while industrial production slipped further. However, other reports suggest the steep descent in the world's largest economy may be slowing.
The Federal Reserve said economic activity in some parts of the economy appeared to be stabilizing, and other data showed that a decline in factory activity in New York state eased this month and that national homebuilder sentiment jumped.
The yen benefited from the uncertainty, as it typically does at times of volatility, while investors sold riskier currencies.
The dollar slipped to 99.18 yen after the Chinese data from 99.42 yen beforehand, while sterling fell to 148.95 yen from about 149.46 and the Australian dollar dropped to 72.10 yen from 72.50.
Oil prices also pared gains. After gaining to above $50 a barrel, prices of U.S. light, sweet crude were last up 42 cents at $49.67 a barrel.
(Editing by Jan Dahinten)