FRAGILE RECOVERY

On the eve of the G8 summit, British Prime Minister Gordon Brown told Reuters that the world had to wake up to the scale of the downturn and stay focused on restarting growth, although Canada said existing measures must be implemented before any talk of further action.

Signs of the fragility of the recovery were seen in world financial markets, oil product stocks, currencies and exports.

The dollar fell against the yen, which surged in its biggest jump in months as investors concern about the global economy led them to shed risk. The euro initially turned positive on the German data, though it later was down against the dollar and yen.

Lingering sluggish demand due to the weak economy was blamed for the higher-than-expected US inventories of refined oil products in the week. Distillate supplies, including diesel and heating oil, hit a 25-year high.

At the G8 meeting in L'Aquila, Italy, Russian President Dmitry Medvedev's spokeswoman said he called a $70-$80 per barrel price for oil "fair" but added that oil prices could not be regulated by government administration.

Encouraging data in recent weeks has been tempered by persistent signs of economic weakness, with China and Japan on Wednesday offering contrasting pictures.

Chinese banks in June extended 1.53 trillion yuan ($223.9 billion) in loans as the government seeks to hit an eight percent growth target this year.

In Japan, the value of its core private-sector machinery orders, a leading indicator of capital spending, slumped 3 percent in May to a record low, defying expectations of a rise. And company bankruptcies jumped more than 18 percent in June and were up 7.4 percent from a year earlier.

A steep drop in exports and corporate investment led to euro zone economy contraction of a record 2.5 percent in the first three months of 2009, although depleted stockpiles in the 16-nation area raised hopes of a better second quarter.