BEIJING/LONDON -- Improved manufacturing data from China on Wednesday suggested its downturn may be bottoming out and US employment figures were not quite as bad as forecast, but crisis-hit Russia's sovereign debt rating was cut.

Job seekers (R), seen here on January 27, 2009, speak to career counselors at the "Back to Work: Jumpstart Your Job Search" event at the New York Public Library in New York City. [Agencies]

US data showed another steep drop in private sector employment but the rate of job losses slowed in January for the first time since September last year. ADP Employer Services said private employers cut 522,000 jobs in January -- slightly fewer than forecast -- after a revised 659,000 jobs were lost in December.

This marked the first slowdown for four months but analysts were cautious before wider US payrolls data on Friday. "I wouldn't put too much meaning into this report. Overall, aside from the the job losses, consumption all over the world is down. That's troubling," said Win Thin, senior currency strategist at Brown Brothers Harriman in New York.

Hopes for a recovery in China helped to lift Asian share prices and a parallel report showed the pace of decline in Europe's dominant service sector also slowed.

But the Russian debt rating downgrade sent the euro tumbling against the dollar and the yen, due to fears of a steep economic downturn across much of central and eastern Europe.

Glimmers in China

There are signs that China's economy may improve soon as official purchasing managers' index for January rose to 45.3, up from 41.2 in December and a record low of 38.8 plumbed in November.

"China's GDP growth will be V-shaped in 2009, with the bottom already being reached in Q4 2008," said Mingchun Sun, an economist with Nomura in Hong Kong, in a note.

The country aims to generate an eight-percent economic growth rate reckoned to be necessary to create enough jobs for its workforce. An official said on Monday that about 20 million rural migrants had already lost their jobs.

China unveiled a $585 billion spending plan in November and central bank governor Zhou Xiaochuan said in remarks published on Wednesday that the pump-priming was working.

"According to economic figures for December, the domestic stimulus policies have achieved initial results," Zhou told the Financial News.

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