GLOBAL MARKETS-Asian stocks waver after China PMI disappoints

Wed Jul 24, 2013 2:12am EDT

* MSCI Asia ex-Japan pares gains after rise to 1 1/2-month
high
    * HSBC flash PMI falls short, shows China manufacturing
sluggish
    * Australian dollar wilts after China data, tame inflation
reading

    By Lisa Twaronite
    TOKYO, July 24 (Reuters) - Asian stock markets wobbled on
Wednesday, while the dollar took back some ground after the
latest reading on China's manufacturing activity showed activity
slowed to an 11-month low in July as new orders faltered and the
job market darkened.
    European markets could shrug off the impact of the downbeat
China data if German and French manufacturing and services PMI
surveys show a slight improvement as expected.
    Financial spreadbetters expect Britain's FTSE 100 to
open around 13 points higher, or up 0.2 percent; Germany's DAX
 to open 13 points higher, or up 0.16 percent; and
France's CAC 40 to open 8 to 9 points higher, or up 0.2
percent.
    The flash HSBC/Markit Purchasing Managers' Index for China
fell to 47.7 this month from June's final reading of 48.2,
marking a third straight month below the 50 threshold between
expansion and contraction. 
    "The lower reading of the July HSBC Flash China
Manufacturing PMI suggests a continuous slowdown in
manufacturing sectors thanks to weaker new orders and faster
destocking," said Hongbin Qu, chief China economist of HSBC.
    "This adds more pressure on the labour market," he said.
    Worries of a rapid slowdown in the world's second-biggest
economy as well as expectations that the U.S. Federal Reserve
will begin to trim its massive bond-buying stimulus later this
year have rattled global markets in recent weeks.    
    MSCI's broadest index of Asia-Pacific shares outside Japan
 pared an earlier rise to its highest since June
7, and was last up about 0.1 percent.
    China shares were headed for their first loss in three days
after the data, weighing on Hong Kong markets. The Shanghai
Composite Index slid 0.8 percent, while Hong Kong's Hang
Seng Index edged down 0.1 percent.   
    Japan's Nikkei share average ended down 0.3 percent,
giving back some of its two-day rally, after government data
showed the country's export growth unexpectedly slowed in June
from a year earlier. The figures were a worrying sign that
China's slowing economy hurt overseas demand and could
potentially threaten Japan's economic recovery. 
    In U.S. trading on Tuesday, the S&P 500 snapped a
four-session winning streak and retreated from Monday's record
closing high, while upbeat results from United Technologies
bolstered the Dow, which also touched a record intraday high. 
   
    The Australian dollar also erased its early gains
against its U.S. counterpart and skidded after the China data,
tumbling 0.5 percent to $0.9251. 
    Tame inflation data left the door open for the Reserve Bank
of Australia to cut interest rates next month if it chooses,
though key measures of underlying inflation were a touch higher
than expected. 
    "If the RBA thinks the economy needs a stimulus hit, these
data are completely consistent with that. Our view is that
growth is slowing in the economy. So we would expect the RBA to
cut rates in August," said Brian Redican, a senior economist at
Macquarie.
    Still, swap markets indicated a slightly smaller chance of a
further RBA easing, implying a 56 percent chance of a cut in
August, down from 62 percent in early trade. 
    Yields on U.S. benchmark 10-year Treasury notes 
rose to 2.518 percent from their U.S. close of 2.507 percent,
though still well below a two-year high of 2.76 percent touched
on July 8.
    The euro slipped after the China data and was last
down 0.2 percent at $1.3203. It rose as high as $1.3238 on
Tuesday, its highest level since June 21.
    Against the yen, the dollar took back some lost ground,
rising 0.4 percent to 99.84 yen, moving away from a
one-week low of 99.13 yen touched in the previous session.
    The dollar index extended gains, adding 0.3 percent
to 82.153, after it skidded to a one-month low of 81.926 on
Tuesday. The index set a three-year high of 84.753 last week. 
    Recent price action suggests that market players are still
long the dollar, which could weigh on the greenback, said
Hiroshi Maeba, head of FX trading Japan for UBS in Tokyo.
    Commodity markets had pushed higher ahead of the China
manufacturing reading, but those gains unravelled in its wake. 
    Copper dropped 0.6 percent to $6,997.50 a tonne, 
after earlier touching a session high of $7,060, its loftiest
since June 18. U.S. crude fell 0.1 percent to $107.11 a
barrel.
    Spot gold remained above the $1,300 an ounce after a
four-session rally pushed prices to a one-month high on Tuesday,
but it dropped 0.6 percent to $1,339.54 an ounce as investors
took profits.
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