The world's rich nations said today that their economies were showing signs of stabilising but recovery from the credit crisis remained uncertain.
A communique by finance ministers from the Group of Eight countries confirmed that they had started to consider how they would unwind economic rescue measures once a recovery was certain.
But the statement, released after a two-day meeting of the ministers in southern Italy, also noted that unemployment might continue to increase even after production picked up.
In a sign of continued divisions among the G8 over how to handle the crisis, the communique made no explicit reference to "stress tests" of banks' financial health, merely saying nations would take needed actions to ensure the soundness of big banks.
The United States and Canada have been pressing Europe to do more to test their banks and to release the results, but some European nations have resisted disclosure.
A surge in long-term government bond yields over the past several weeks shows markets fear huge sums of money poured into economies, through state spending and interest rate cuts, will ultimately fuel inflation and cripple government finances.
Pressure has therefore been building in the G8 for talks on ways to wind down the stimulus as soon as it is no longer needed -- "exit strategies" that would prevent market interest rates from climbing high enough to threaten economic recovery.
Germany and Canada yesterday urged the G8 to hold its first talks on exit strategies. But other countries are less enthusiastic about discussing the subject and are less convinced that the worst of the economic slump is over.
Euro zone industrial production shrank by more than a fifth in April, new data showed yesterday, raising risks that the second quarter will be weaker than expected.
"We must not get wrapped up in the pick-up when we're still in the process of relaunching, stimulating and making sure the stimulus plans are working," French Economy Minister Christine Lagarde told a briefing late last night.
"We cannot say that at the end of X months we will be at such a threshold and we should withdraw such and such a support."
US Federal Reserve chief Ben Bernanke has urged Washington to start planning to restore fiscal balance. But US treasury secretary Timothy Geithner has said that though he wants to "take stock" of recovery efforts, stimulus work is not yet finished.
"The dominant focus of policy everywhere -- everywhere -- still is on trying to make sure we have a strong foundation for recovery," he told a news briefing earlier in the week.
There were signs of continued disagreement among G8 nations in other areas. Canadian finance minister Jim Flaherty called on Europe to conduct more "stress tests" of its banks -- studies of their financial health -- and to reveal the results, at least on a system-wide basis.
But Europe's leading powers are divided on publishing results of their tests, which are run by different regulators using different methods, and there was no mention of stress tests in the draft G8 statement.
French economy minister Christine Lagarde said today that European nations would "explain nicely to the Americans" that there would be no quick consensus on stress tests.
The G8 ministers are due today to release a set of principles and standards for the conduct of business globally, calling for more information and protection for investors, tighter regulation, and a stronger sense of commercial ethics.
"The breadth and intensity of the prolonged downturn have revealed fundamental weaknesses of the global economic and financial systems," said a draft summary of the principles, known as the "Lecce Framework".
The G8 includes the United States, Germany, Japan, Britain, France, Italy, Canada and Russia.
Reuters