Concerns about the debt burden facing countries trying to spend their way out of the economic downturn spooked investors on Thursday as New Zealand unveiled a budget that forecast a decade of government deficits.

US President Barack Obama said America's economy was past the worst of the crisis. 'It's safe to say we have stepped back from the brink,' he told a fundraiser in Beverly Hills. 'There is some calm that didn't exist before.'

But despite increasingly upbeat comments from policymakers, global markets have focused on the extra debt being taken on by governments to fund their stimulus packages, ever since Standard & Poor's lowered its outlook for Britain's sovereign credit ratings to negative a week ago.

That prompted scrutiny of other major economies -- including the US -- where concerns about the US debt mountain sent Treasury prices and stocks tumbling on Wednesday. Asian stocks fell in turn on Thursday.

In its annual budget on Thursday, New Zealand's government announced the biggest deficit in 25 years and forecast 10 years of government deficits, with debt peaking at 43 per cent of GDP in 2016/17.

The government had been trying to give the economy enough of a boost to help deal with the worst recession in decades while avoiding pushing up debt to a level that would have prompted a downgrade by the ratings agencies. S&P has a negative outlook for New Zealand's ratings because of the country's debt burden.

Most analysts said the country had probably avoided a downgrade for the moment. Moody's said it was keeping its stable outlook for New Zealand after the budget.

Bankruptcy looms for General Motors

Global markets are also watching developments in the US auto industry, where General Motors Corp moved closer to filing the largest bankruptcy ever for a US industrial company after a crucial bond exchange proposal failed.

GM said in a statement that an offer to exchange $27 billion in bond debt for a 10 per cent stake in a reorganised company by a midnight deadline had fallen far short of the 90 per cent acceptance target.

GM's board was expected to meet this week to consider the dwindling options available, but the company is widely expected to follow fellow US automaker Chrysler into bankruptcy.

Chrysler faces a key court hearing on Thursday anticipated to clear the way for Fiat SpA, along with labour unions and the US and Canadian governments, to take control of a restructured company in exchange for $2 billion paid to lenders.

The US government-brokered bankruptcy for Chrysler has been seen as a test case for the more complex and larger filing expected from GM in the next few days.

In Germany, talks on shielding GM's European brand Opel from the looming bankruptcy of its parent ended without a resolution.

Economy Minister Karl-Theodor zu Guttenberg told reporters after more than 12 hours of talks in Berlin that the German government needed answers from GM and the US administration by Friday and might be able to reach a deal then.

The government is considering offers for Opel from Fiat, Canadian auto parts company Magna International Inc, Belgium-listed holding RHJ International SA and China's Beijing Automotive Industry Corp.

In Britain, outgoing central bank monetary policy committee member David Blanchflower said the world should not assume the worst of the economic crisis is necessarily over.

'My worry is that there can be many false dawns and we shouldn't just assume that everything is over,' the usually dovish economist told The Times newspaper.

'We have to have a rethink. You're going to have to throw away lots of economics and start again. How can anybody not say that when we've had the greatest financial crisis in 100 years.'

With many policymakers saying regul