* Euro dips on weakening German data
* HSBC China manufacturing PMI hits 3-mth high, lifting oil
* European shares and U.S. stocks futures recover as
By Richard Hubbard
LONDON, Oct 24 The euro hit a one-week low
against the dollar on Wednesday after surprisingly weak data
from regional powerhouse Germany, though an improving outlook
for China supported shares and oil.
The Chinese data was also set to give Wall Street a modest
lift when share trading begins after Tuesday's sharp falls.
But the dismal German data took its toll on the euro,
which fell 0.4 percent to $1.2922, well below its peak of
$1.3140 hit early last week.
Activity in Germany's manufacturing and service sectors
declined for a sixth straight month in October as order books
thinned, indicating Europe's largest economy had clearly
stagnated in the second half of 2012.
A separate poll of 45 economists by the Munich-based Ifo
think-tank added to the gloom by revealing that business
sentiment in October fell below even the weakest of forecasts.
"In all, while recent actions by euro zone policymakers may
have calmed the markets, the euro zone's economic problems
remain firmly in place," said Ben May, European economist at
October's Composite Purchasing Managers' Index (PMI) survey
for the whole 17-nation euro zone bloc meanwhile confirmed that
the recession was likely to deepen across the whole region as
activity hit its lowest levels since June 2009.
The euro could gain support later in the session when
European Central Bank president Mario Draghi faces questions
from German lawmakers.
Draghi is likely to be grilled on the ECB's bond-buying
plans to ease the debt crisis, which have faced fierce
opposition from some in Germany.
In equity markets any selling on the weak German data was
offset by an earlier Chinese PMI report that pointed to a modest
recovery for the world's second largest economy in October from
the growth slowdown seen during the third quarter.
HSBC's Flash Manufacturing Purchasing Managers Index (PMI)
for China rose to a three-month high of 49.1 for October,
although it was still below the 50-point mark that separates
contraction from expansion.
The Chinese data helped Asian share markets trim losses
caused by weak corporate earnings and left the MSCI world equity
index virtually unchanged after three straight
days of losses.
"I don't think China is going to get the global economy out
of the rut that it's in, but what it might do is prompt a little
bit of caution about selling (equities)," said Michael Hewson,
senior markets analyst at CMC Markets.
The Chinese PMI data lifted hopes of greater demand from the
world's No. 2 oil consumer, sending Brent crude up 40 cents a
barrel to $108.65 and ending a six-day losing streak.
U.S. oil rose 16 cents to $86.83.
"The demand picture is looking less bad than it was," said
Jack Pollard, research analyst at Sucden Financial.
However, investors were awaiting inventory numbers from the
Energy Information Administration (EIA) due later in the day to
gauge the demand outlook for the United States.
Gold was around $1,708.90 an ounce, holding near a
seven-week low of $1,703.50, while dealers awaited the U.S.
Federal Reserve's policy statement later in the day.
The Fed unveiled a third round of bond purchases when it
last met in September to try to rev up sluggish economic growth
and is not expected to take any fresh steps when it ends its
The metal has suffered along with other industrial
commodities this year from perceptions that the global economy
is struggling for growth and is on track to decline in October
for the first month in since May.