* Euro zone services PMI dips to six-month low in September
* Japan, Australian cbank policy moves surprise markets
* Indian, Chinese PMIs hit lowest in several months
* British PMI rises, but new orders show weakness ahead
(Adds market reaction, details, comment)
By Andy Bruce
LONDON, Oct 5 Growth slowed among Chinese and
euro zone services firms in September, surveys showed on
Tuesday, with Ireland and Spain tipping back into decline and
Asia's emerging powerhouses continuing to outstrip Europe.
Central banks added to unease about the global recovery with
Japan returning to a zero percent interest rate policy and
Australia surprising markets by refraining from a rate hike.
Strong growth readings, albeit a little slower, from Germany
and France prevented the broader euro zone purchasing managers
index (PMI) from dropping too far last month, balancing out
contraction in the service sector firms that dominate the
struggling Irish and Spanish economies.
PMIs showed Chinese and Indian private firms expanding at
their slowest rate in many months, although at a rate still
faster than their European peers.
British companies bucked a slowing trend, although its
survey showed poor new orders signalling weaker times ahead.
While the latest batch of PMI surveys added to evidence that
the global economic recovery is cooling and not ending, central
bankers in Japan unveiled a slew of new measures to boost a
domestic economy stuck in the stranglehold of a strong currency.
The Bank of Japan reinstated an interest rate target range
of zero-to-0.1 percent, last seen in 2006, and pledged to buy 5
trillion yen ($60 billion) worth of assets to inject the economy
with fresh funds. [ID:nTOE69305D]
"It was an utterly surprising and bold move. The BOJ has
sent a favourable message to the markets, which had been
expecting it to take only small, gradual steps," said Seiji
Shiraishi, chief economist at HSBC Securities Japan.
The move followed comments from U.S. Federal Reserve
Chairman Ben Bernanke on Monday that asset purchases had lowered
borrowing costs and helped the economy, and more buying could
further ease financial conditions. [ID:nN04133934]
Financial markets expect the Fed to embark upon another
round of asset buying to bolster a sluggish recovery as early as
its November meeting, but policy-makers remain divided about the
effectiveness of further purchases.
The Reserve Bank of Australia confounded market expectations
by opting to keep its key cash rate at 4.5 percent but its
governor, Glenn Stevens, said higher rates will be required at
some point to meet its medium-term inflation target and analysts
said a November hike looked almost certain. [ID:nSGE69401B]
CHINA SLOWER BUT OUTSTRIPS EUROPE
The HSBC China services PMI fell to a 19-month low in
September of 55.2 from 57.6 August, still strongly above the
50-mark which separates growth from contraction.
For China, manufacturing remains paramount and its industry
PMI rose strongly last week. [ID:nTOE692006]
Weakness in incoming business drove the PMI in rival
emerging market India down to a 10-month low of 55.6 from 59.3
the previous month.
"India's service industry is stepping off the throttle.
Along with the manufacturing sector, growth is slowing, although
the expansion continues," said Frederic Neumann, Co-head of
Asian economics research at HSBC.
Despite slowing, both the Indian and Chinese PMIs showed a
rate of growth exceeding European rivals.
The final Markit Eurozone Services PMI for September, which
fell to a six-month low of 54.1 from 55.9 in August, showed a
lopsided euro zone economy heavily reliant on German and French
Click here for a graphic showing a comparison of PMIS
The service sector in Ireland, whose government last week
revealed a spiralling of its banking sector bailout, contracted
for the first time in six months thanks to a sharp drop in new
Moody's ratings agency said on Tuesday it may cut Ireland
credit grade again, citing the weakness of domestic demand just
as the government prepares a new round of harsh budget cuts to
mend its bailout-burdened accounts. [ID:nnLDE6940AV]
Spain, also in rating agencies' crosshairs, saw its service
sector recede at a faster pace in September as it too prepares
for more austerity and years of high unemployment.
Not all of the PMIs showed a gloomy picture. France and
Germany saw growth slow but to levels still stronger than other
euro zone countries, with French businesses sounding their most
optimistic in more than six years.
And in Britain, the headline PMI unexpectedly rose to 52.8
from 51.3, although it showed the weakest inflow of new business
in more than a year. [ID:nSLA4LE6EM]
"Today's survey at least provides some reassurance that the
economy is not plunging head-first into a renewed contraction,"
said Capital Economics' Vicky Redwood.
Recent anecdotal evidence from some of Europe's biggest
firms still suggests a cautiously upbeat tone, although Europe
increasingly relies on demand from emerging economies.
Tesco (TESO.O), the world's third-biggest retailer, said it
believed the global economy was recovering strongly and growth
in emerging markets would help to prevent developed economies
from falling back into recession. [ID:nLDE6930F0]
Europe's largest travel firm TUI Travel TT.L said bookings
for winter and summer were doing well although that was largely
thanks to picking up more customers following the failure of
several smaller operators. [ID:nLDE6931JX]
(Additional reporting by David Milliken in London, Alex
Richardson in Singapore, Wayne Cole in Sydney, and Leika Kihara
and Rie Ishiguro in Tokyo, editing by Mike Peacock)