PARIS: Recession storms barrelled across Europe on Friday as data revealed the extent of the damage to Germany and France, but the IMF forecast that the world economy would turn the corner by year's end.

Germany registered its worst performance on record when its output was shown to have shrunk 3.8 percent in the first quarter, French gross domestic product contracted 1.2 percent over the same period and Italy fell back by 2.4 percent.

The gloomy news from western Europe was reflected further east with Romania and Austria becoming the latest countries to officially slide into recession while Hungary and Slovakia also registered sharp falls in output.

However Europe's leading stock markets all rose, mirroring a trend in Asia and Wall Street and reflecting a growing belief the crisis had bottomed out.

"We still see a recovery in first semester of 2010 and the beginning of the turning point in October, November or December" this year, the International Monetary Fund's managing director Dominique Strauss-Kahn said in Vienna.

Even in Japan, where there were signs of mounting deflationary pressures, the government detected signs that the worst was over.

The quarter-on-quarter contraction in Germany, the world's biggest exporter, was even steeper than the 2.2 percent fall recorded in the final three months of 2008, the statistics office said.

The worse-than-expected German result -- economists had forecast a drop of 3.2 percent -- was the worst since records began in 1970.

"This very bad news, which was broadly expected, had demonstrated the large dependence of the German economy to foreign trade," said Natexis economist Costa Brunner. "But the good news is that the worst is behind us."

France's statistics agency released figures showing that French gross domestic product shrank 1.2 percent in the first quarter of 2009 and had been contracting since the second quarter of last year, correcting previous figures and revealing that the country has been in underlying recession for 12 months.

French officials had already forecast output would fall by 2.5 percent this year but, following the release of new estimates, Finance Minister Christine Lagarde said the drop would be closer to three percent.

Meanwhile an official EU estimate showed the 16-nation eurozone contracted a record 2.5 percent in the first quarter.

However Europe's main stock markets shrugged off the data, with London's FTSE 100 index adding 0.36 percent in late morning trade. Frankfurt's DAX 30 climbed 0.13 percent and the Paris CAC 40 increased 0.53 percent.

"This time around, the worst really seems to be over," said Carsten Brzeski, an analyst at ING bank.

"Looking ahead, the second quarter has the potential to surprise to the upside," boosting stock markets, he said.

Japanese share prices closed up 1.88 percent, mirroring gains on Wall Street.

The rises came despite mounting concerns that the world's number two economy may be facing a repetition of its 1990s deflationary spiral when falling prices led to weak consumer spending.

Central bank figures showed wholesale prices fell 3.8 percent in April from a year earlier, the steepest drop in 22 years.

However Finance Minister Kaoru Yosano said there were signs the recession was abating with Japan's core machinery orders falling 1.3 percent in March from the previous month, less than expected.

"I welcome some signs of easing in the economic slowdown. But we need to remain alert about overall economic conditions," he told reporters.US Treasury Secretary Timothy Geithner said earlier this week the financial system "is starting to heal" as a response to government efforts to get more credit flowing, including moves to clean up so-called "toxic assets" that are weighing on banks' ability to lend.