Warnings that the world economy still faces a rocky road tempered market enthusiasms on Wednesday, with Japan indicating it might need to do more to ease credit pressures and Britain biding its time.

World Trade Organisation Director-General Pascal Lamy also said that it was too early to see if measures to improve trade financing were working.

Has it worked? A bit too soon to say, Lamy told a news conference in Singapore after talks there with ministers from the United States, China and other Asia Pacific Economic Cooperation (APEC) members.

The WTO said world trade volumes will shrink 10 percent this year though Lamy said Asia was leading a trade recovery.

Earlier on Wednesday Bank of Japan Deputy Governor Hirohide Yamaguchi hinted he could favor extending the central bank's steps aimed at easing credit strains beyond a December deadline.

But Bank of England (BoE) policymakers voted unanimously this month to defer until August whether to change their quantitative easing (QE) policy when they will have a quarterly inflation report to look at.

Intruding into the optimism that has propelled stock markets in recent days, eurozone industrial orders plunged nearly a third year-on-year in May and defied expectations of a rebound from April.

These orders are disappointing. We were looking for a substantial increase really on a monthly basis in May, Juergen Michels, an analyst at Citigroup, said.

Michels said the orders data looked inconsistent with other indicators from the eurozone area, but if confirmed it would show the region remained mired in crisis in the second quarter.

The data followed warnings from U.S. Federal Reserve Chairman Ben Bernanke on Tuesday that although the global economy could be on the mend, rising unemployment might yet undercut recovery in the United States.

After a brutal slump that began in the second-half of 2008, the world is starting to head down the long road to recovery, spurred by low interest rates and hundreds of billions of dollars in stimulus spending by governments.

French consumer spending last month rose much more than expected, showing shoppers were helping the eurozone's second largest economy toward recovery.

But the Bank of Japan's Yamaguchi, speaking in Hakodate, Japan, emphasized the bank would focus on downside risks to the economy, although it did not expect a deflationary spiral.

While Yamaguchi said he had no fixed view on whether the BOJ would extend beyond December its corporate funding support measures, analysts said his cautious view suggested it could be some time before it exits those measures.

Corporate finance has stopped deteriorating, and spreads are coming in gradually, said Satoru Ogasawara, an economist at Credit Suisse in Tokyo.

But Yamaguchi is cautious about the future. If finance conditions remain tight, I think they will extend the corporate finance measures again.

In London analysts said they believed the Bank of England's Monetary Policy Committee (MPC) was finely balanced on whether to spend another 25 billion pounds buying assets to boost credit and to keep interest rates at 0.5 percent.

It might mean they don't sanction the extra 25 billion pounds at the next meeting. But it's a close call -- unless the data surprises on the downside, I suspect they won't, said George Buckley, chief UK economist at Deutsche Bank.

The BoE has the leeway to take the QE total to 150 billion pounds ($245.9 billion). Beyond that it would have to get permission from the government.

The MPC said Q2 GDP data, due on Friday, would probably show a smaller fall than it had thought in May and surveys also suggested there was more momentum going into the second half.

Asian shares hit a 10-month peak over the day, with MSCI's index of Asia-Pacific stocks outside of Japan rising for a seventh straight session.

But both Europe and U.S. markets showed the recent surge might be tempting investors to take profits.

It's not surprising the market is taking a breather, said Franz Wenzel, strategist at AXA Investment Managers, in Paris.

It's got a little bit too far ahead of itself. The corporate news has been good, due to restructuring. We've seen some green shoots, but we need to some more evidence of recovery.

S&P stock futures pointed to a lower start on Wall Street, where heavyweights Morgan Stanley, PepsiCo, Pfizer, Boeing and Wells Fargo were due to report.

Japan United kingdom China Ben Bernanke