Policy euphoria makes way for humdrum data By Alan Wheatley, Global Economics Correspondent LONDON (Reuters) - The world's top two central banks have administered extra-strong monetary painkillers, but the global economy will still need a lot more time to recover from its thumping debt hangover. Financial markets were euphoric after the Federal Reserve surpassed expectations and promised on Thursday to keep the money taps fully open until the U.S. labor market makes a sustained recovery. The European Central Bank had already impressed investors a week earlier by pre-announcing unlimited, albeit conditional, secondary-market purchases to bring down sky-high yields on bonds issued by struggling euro zone members such as Spain. Now it's time to come down to earth. Surveys due this week are likely to show why, in the words of Stephen Cecchetti, the chief economist of the Bank for International Settlements, there are no grounds for complacency. Global financial reforms are not yet complete. Southern Europe has not solved its fiscal problems and lack of competitiveness. And the world economy is listless, he said. The pace of the recovery in the advanced economies remains disappointing. There are also signs of lower economic growth in emerging market countries," Cecchetti said on a conference call. Exhibit No. 1 underlining that weakness will be Thursday's advance September poll of purchasing managers across the euro zone. It is likely to show the 17-country area mired in recession. Economists polled by Reuters expect the index derived from the survey to edge up to 45.5, from 45.1 in August, but that would still be well below the 50 mark delineating contraction from expansion. "A lot of very difficult steps need to be taken sooner rather than later for the sovereign debt crisis to be resolved and, until then, the economy will likely remain sluggish at best," said Bert Colijn, an economist at The Conference Board research group. 2, from Japan, will be the Reuters Tankan survey for September due on Wednesday, which is likely to point to challenging conditions for manufacturers, according to economists at Daiwa Capital Markets. The Japanese government last week lowered its growth outlook for the second month in a row, putting pressure on the central bank to ease monetary policy afresh, not least to weaken the yen. The Bank of Japan ends a two-day meeting on Wednesday. However, Daiwa expects the central bank to stand pat until next month. 3 a day later will be September's survey of Chinese purchasing managers. With no obvious pick-up in activity, Goldman Sachs is looking for more weakness after August's reading of 47.5. Many investors have been surprised that China has not acted more forcefully to cushion this year's slowdown in growth. Cecchetti with the Basel-based BIS said the moderation in developing nations could have the welcome effect of putting their growth on a more sustained footing. "But, even so, it means that the emerging market economies won't support global growth as much as they have in recent years," he said. Which means waiting for the Fed's and the ECB's monetary medicine to kick in. Andrew Cates, an economist with UBS in London, said it has been foolhardy until recently to think Europe might spring a positive surprise. But now, despite a still-difficult near-term outlook, the ECB's plan to buy bonds provides some modest grounds for optimism. "If that initiative is successful in removing the risk of a euro zone default and exit scenario, credit conditions in the European banking sector ought to ease up, thereby generating a higher flow of finance to the real economy," Cates said in a report. His economic modeling suggests that increased lending to businesses and consumers could boost 2013 GDP in the euro zone by 0.5 percentage point. The spillover of confidence could raise U.S. output by 0.3 percentage points, while Chinese growth would get a similar boost through higher demand for its exports.