* Weak China manufacturing hits stocks, global emerging
* Euro lifted by strong German-led euro zone PMIs
* U.S. Treasuries up on safe-haven bids
By Barani Krishnan
NEW YORK, Jan 23 U.S. stocks and global emerging
markets sold off sharply on Thursday on disappointing Chinese
manufacturing data and weak company earnings, while the euro
rose against the dollar after encouraging survey results on the
euro zone's private sector.
European shares backed away from their lofty multi-year
highs hit earlier in the week as caution set in over global
The MSCI emerging equities index fell 1 percent to
its lowest in nearly two weeks while emerging sovereign debt
spreads widened by 9 basis points to 352 bps over U.S.
Treasuries. Selling was seen in emerging currencies as well,
with the Turkish lira earlier touching a record low, the rouble
hitting a five-year low and Argentina's peso down 17 percent.
The slide extended to commodities, with the London-traded
Brent crude oil slipping below $108 a barrel after weak data
from the world's top two oil consumers revived worries over the
outlook for demand.
U.S. Treasuries prices rose as the losses on Wall Street and
data suggesting a slowing in Chinese manufacturing revived
safe-haven bids for bonds. Data on domestic jobless claims also
suggested a moderate pace of job growth but not enough for the
Federal Reserve to accelerate its pace of reducing its
In U.S. stocks, disappointing earnings reports from
bellwether names such as McDonald's Corp added to
investor sentiment already dented by troubling report on China's
The report, showing a mild manufacturing slowdown extending
into the new year in the world's second-largest economy, sparked
selling in the popular S&P 500 E-mini futures, which carried
into the cash market's open. Financials and materials were the
weakest of the S&P's sectors on Thursday.
"The China data continues to be persistently weak, we don't
view this as a one off kind of number and we do view the PMI
series as especially credible," said Jim Russell, senior equity
strategist for U.S. Bank Wealth Management in Cincinnati.
McDonald's Corp's reported weaker-than-expected
revenue as fewer customers ate at its restaurants. Shares
rebounded from earlier losses to climb 0.6 percent to $95.48.
Netflix Inc shares surged 17 percent to $392.34 as
the best performer on the S&P 500. The world's largest
video-streaming company's quarterly earnings late Wednesday
showed it added more than 2.3 million U.S. customers in the
By 11:42 a.m. EST (1642 GMT), the Dow Jones industrial
average was down 162.60 points, or 0.99 percent, at
16,210.74. The Standard & Poor's 500 Index was down 16.73
points, or 0.91 percent, at 1,828.13. The Nasdaq Composite Index
was down 36.85 points, or 0.87 percent, at 4,206.15.
In U.S. Treasuries, the benchmark 10-year note was up 16/32,
its yield at 2.8011 percent.
The euro climbed as purchasing manager indices rose across
the euro zone, led by Germany, the region's biggest economy. The
gains fueled hopes the bloc is finally emerging from its debt
crisis - contraction even slowed in France, the euro zone's
The euro gained almost a full cent against the U.S. dollar
to $1.3620. It also recovered some of the ground it lost
to the UK pound on Wednesday, when it hit a 1-year low against
Despite the stronger PMI data out of Europe, stocks in the
region fell, unable to extend gains from earlier in the week.
The pan-European stock index FTSEurofirst fell 1.2
percent to 1,330.96, retreating from Tuesday's 5-1/2 year highs.
The top European shares index declined by 1.1
percent to 3,116.28.
World stocks fell 0.7 percent to 404.54.
The euro rose almost 1 percent against the dollar to $1.3675
. It climbed as high $1.3677, its strongest level since
The currency worst hit by the weak Chinese data was the
Australian dollar, which shed a three-quarters of a U.S. cent to
$0.8773. Speculators sold it as a liquid proxy for
growth in the Asian region.