Asian stocks pulled back from a six-month high on Thursday, while the safe-haven yen jumped against major currencies after China posted its slowest quarterly growth ever in a reminder 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 more slowly than expected in the first quarter, but also showing improvements in March, providing tentative signs that the worst may be behind.

After an impressive month-long rally in global equities investors still appear conflicted between seeing glimmers of hope that a global economic downturn is showing signs of easing and other indicators that point to more pain ahead.

Riskier assets, such as oil, also pared gains on Thursday but not by too much, while some regional bonds such as in Japan fell in a sign that not every investor is turning cautious.

European shares were expected to open higher as well.

Also helping shore up hope are the stimulus measures passed by some of the major global economies. In China, for example, a surge in lending in the fourth quarter tied to the government's $585 billion package helped cushion the economic blow.

Central bankers are also cutting interest rates and flooding liquidity into financial systems via unconventional methods such as buying government or corporate debt.

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 <.MIAPJ0000PUS> gained 0.8 percent as of 10:45 p.m. EDT. Before the data from China, the index had gained as much as 2.1 percent to touch its highest since October 15.

Most major Asian indexes lost steam as the day advanced. Japan's Nikkei average <.N225> gained as much as 3.3 percent at one point on Thursday but ended the session up just 0.1 percent

The story was similar in other markets such as Hong Kong <.HSI> and South Korea <.KS11>, both of which ended with only modest gains.

Contradictory signals are also afflicting the U.S. and Japanese economies.

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, also on Wednesday, the Federal Reserve said economic activity in some parts appeared to be stabilizing, while other data showed that a decline in factory activity in New York state eased this month.

In Japan, confidence at companies is hovering near record low levels, according to a Reuters poll, but firms at least expect business conditions to improve in the next three months.

MIXED SIGNALS

The yen on Thursday benefited from the uncertainty, as it typically does at times of volatility, while investors sold riskier currencies.

The dollar slipped 0.5 percent on the day to 98.88 yen, well below the six-month high of 101.45 set last week.

The Australian dollar lost 0.6 percent to 71.81 yen, while the Canadian and New Zealand dollars also fell against the yen.

With the global economy weak there had been hopes that stronger-than-expected Chinese GDP would help pull it out of recession, said Masato Mori, a senior manager at NTT SmartTrade in Japan.

Elsewhere, the euro eased 0.2 percent to $1.3194, hurt by comments by a European Central Bank top official that it would lay out a package in May of non-traditional monetary policy measures to boost the euro-zone's economy.

Oil prices had started the day strong, breaching the $50 a barrel mark but gave up some of its gains, with U.S. light, sweet crude were last up 42 cents at $49.67 a barrel.

Regional bonds, which tend to gain at times of fear, instead fell with some markets also weighed down by supply concerns as governments seek to sell bond to finance their stimulus measures.

Japanese government bond June futures fell 0.24 point to 136.70, sliding toward a 5-1/2-month low of 136.43 hit last week on worries about the surge in debt issuance.

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