U.S. growth spurt fans recovery hopes

The state of the global economy, slowly shaking off its worst crisis since World War Two, is the focus of talks on the final day of the World Economic Forum in Davos.

Bankers were also meeting regulators early on Saturday to discuss bank regulation plans, and the Financial Times reported increasing industry support for a global bank wind-down fund.

The U.S. economy grew at a faster-than-expected 5.7 percent pace in the fourth quarter, the quickest in more than six years, as businesses made less-aggressive cuts to inventories and stepped up spending.

I think it's great news that we have this kind of growth. There are downside risks, yes, but we're having a generalized recovery and that's a fact, OECD Secretary General Angel Gurria told Reuters Insider television.

But not all delegates are convinced the recovery is on solid ground.

Daniel Vasella, chairman of Swiss drugmaker Novartis , told Reuters the risk of a double-dip recession was substantial.

Policymakers are acutely aware that to pull the plug too early on the massive amounts of stimulus pumped into the world economy, could risk a fresh downturn.

When to changed tack is the key question for 2010.

Earlier this week in Davos, South Korean President Lee Myung-bak, who heads the G20 this year, urged member countries to tread gently as they begin to unwind stimulus measures.

And even China, whose economy continues to steam ahead, is cautious. China's Vice Premier Li Keqiang said on Thursday there were twists and turns ahead and vowed that China would maintain stable policies.

PRESSURE ON BANKS

As the global economy and conditions in the financial sector improve, policymakers are increasing pressure on banks to start lending more to firms and households and not get swept up in a new wave of profit-driven risk-taking.

Regulators and bankers appear to have struck some common ground in Davos, agreeing on the need to ensure changes to the rulebook are global and executives were reported to be swinging behind the idea of a global levy.

Barney Frank, the powerful chairman of the U.S. House Financial Services Committee, said agreeing to a global levey would be major recognition of reality.

Josef Ackermann, chief executive of Deutsche Bank AG , floated a bank support fund in November and has the opportunity to press his case further at talks between bankers and regulators.

Ackermann is attending a session on the global economic outlook, along with European Central Bank President Jean-Claude Trichet, International Monetary Fund Managing Director Dominique Strauss-Kahn, People's Bank of China deputy governor Zhu Min and French Finance Minister Christine Lagarde.

The IMF has sharply raised its global economic growth forecast, casting developing countries in a leading role while rich nations struggle with high unemployment and government debt.

The IMF said on Tuesday the world economy will expand by 3.9 percent in 2010, much higher than the 3.1 percent it projected in October, and the pace will pick up to 4.3 percent next year. The OECD's Gurria did not expect another dip into negative growth.

The economies are coming out of recession, sluggishly, and it's modest growth on the positive side for a foreseeable future. I don't see a double dip.

The Paris-based organization sees global growth in 2010 of 3.4 percent from the 2.3 percent it predicted in June, after an estimated contraction of 1.7 percent of 2009.

(Reporting by Natsuko Waki and Krista Hughes, editing by Mike Peacock)