* Weak China manufacturing hits stocks, emerging markets
* Euro lifted by strong German-led euro zone PMIs
* U.S. Treasuries, gold up on safe-haven bids
By Barani Krishnan and Herbert Lash
NEW YORK, Jan 23 Global equity markets sold off
on Thursday on disappointing Chinese manufacturing data and weak
corporate earnings, while the euro jumped against the dollar
after mostly encouraging business surveys from the euro zone's
MSCI's emerging markets equities index fell 1.3
percent as emerging sovereign debt spreads widened 9 basis
points over U.S. Treasuries after factory activity in China
contracted in January for the first time in six months.
A decline in the flash Markit/HSBC Purchasing Managers'
Index in China, the world's second-largest economy, reinforced
concerns about global growth, especially in commodity-sensitive
The Turkish lira touched a record low, the ruble hit a
five-year low and gold surged more than 2 percent, notching its
biggest one-day rally in three months, on its safe-haven appeal.
U.S. stocks fell, with the Dow Jones industrial average
recording its third consecutive day of losses, after the
manufacturing data in China and a mixed bag of U.S. corporate
"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.
Data supporting investor fears that expectations for future
earnings growth will be reduced helped spur the equity selloff,
said Brad McMillan, chief investment officer at Commonwealth
Financial in Waltham, Massachusetts.
"We have seen some disappointing numbers on both earnings
and revenues, and the prices that looked reasonable based on
double-digit earnings growth are looking less so when you dial
that back," McMillan said.
On Wall Street, the Dow Jones industrial average
closed down 175.99 points, or 1.07 percent, to 16,197.35. The
S&P 500 lost 16.4 points, or 0.89 percent, to 1,828.46
and the Nasdaq Composite dropped 24.126 points, or 0.57
percent, to 4,218.875.
Offshore drilling contractor Noble Corp slumped 8.6
percent to $33.13, the worst performer on the S&P 500, after
saying Wednesday that rig utilization was expected to drop this
European shares fell on poor corporate results and the weak
Chinese data. Nokia reported a steep drop in network
equipment sales, an area soon to become its core business after
its telephone division is sold.
British publisher Pearson dropped 8.2 percent after
warning that its 2013 earnings per share would be lower than
U.S. jobless claims data suggested a moderate pace of job
growth, and the Fed is expected to continue to taper its bond
purchases when it meets next week.
The dollar tumbled, pressured by the strong manufacturing
data in the euro zone and new regulations in Switzerland that
raised the level of capital banks must hold against their
mortgage books, tightening Swiss monetary conditions.
The greenback fell more than 1 percent against the euro and
the Swiss franc. The dollar fell to a three-week low against the
franc and marked its biggest single-day slump against the
currency since late May.
The euro rose 1.1 percent against the dollar to $1.3695
, after hitting $1.3698, its strongest since Jan. 14.
The dollar dropped 1.51 percent against the Swiss franc to
0.8974 franc. Against the yen, the dollar fell 1.3
percent at 103.15.
The Argentine peso suffered its steepest single-day decline
since the country's devastating 2002 financial crisis, extending
Wednesday's losses, as the central bank gave up trying to prop
up the currency.
Copper fell and London-traded Brent crude oil slipped below
$108 a barrel after the weak data from China revived worries
over the demand outlook.
Brent crude fell 69 cents to settle at $107.58 a
barrel. U.S. oil settled up 59 cents at $97.32.
"The data is a bit concerning," said Ken Hasegawa, a
commodity sales manager at Newedge Japan. "There was a big
increase in U.S. crude oil stocks and now China PMI numbers are
worse than expected. That's making the market come off."
U.S. government bond prices rose, with prices on the 10-year
note gaining 22/32 to yield 2.7790 percent.