* Euro lifted by strong German-led euro zone PMIs
* Shares labour, Wall Street seen down 0.3 percent at open
* Chinese manufacturing survey disappoints, index drops to
* Shanghai shares soften; Australian dollar, metals takes a
By Marc Jones
LONDON, Jan 23 Strong data from euro zone
powerhouse Germany helped to lift investors' spirits and the
euro on Thursday, after soft Chinese manufacturing figures sent
a chill through growth-sensitive markets in Asia.
Purchasing manager indices rose across the euro zone, led by
the region's biggest economy. The gains fuelled hopes the bloc
is finally emerging from its debt crisis -- contraction even
slowed in France, the euro zone laggard.
The euro turned around its recent poor form, climbing 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 sterling.
Top European shares were virtually unchanged
near 5 1/2-year highs, as the better-than-expected PMI data
offset China's first drop in factory activity in six months.
China's flash Markit/HSBC PMI index fell to 49.6 in January
from December's 50.5, suggesting a mild slowdown at the end of
2013 has continued into the new year.
"Overall, the message from the euro zone PMIs were a good,
positive surprise. It gives some support to the idea that we are
going to get stronger activity growth," said Peter Dixon at
"(The Chinese PMI) is consistent with the idea that China
has shifted to a lower growth path, which is exactly in line
with what the government is calling for. Is it a concern? Not at
this stage. It's a bit of a warning signal, but that's it."
Shanghai shares slipped 0.5 percent on the data,
leading MSCI's all-world index to its biggest
fall in over a week.
Wall Street was also expected to start in the red when
trading resumes, and European stocks were still labouring
despite gains in Portugal and Italy. Those moves contrasted with
the pattern in the bond market.
"We remain highly overweight (on European equities," said
Didier Duret, chief investment officer at ABN Amro. "The only
thing is we look for profit taking in due time, but it is not
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.
MSCI's broadest index of Asia-Pacific shares outside Japan
also lost 1.1 percent. Australia's main index
dropped 1 percent.
Japan's Nikkei surrendered early gains to trade 0.5
percent down on the day. The news from Japan had been better,
with a Reuters survey of business sentiment improving for a
third straight month in January to reach a high last seen in
2010. Optimists far outnumbered pessimists.
For other currencies, it was all about central bank
expectations. Sterling held at $1.6562, surging on a
sharp fall in UK unemployment. The drop in the jobless rate
stoked speculation the Bank of England would start hiking
interest rates sooner then previously forecast.
The Canadian dollar fell further after the Bank of
Canada warned that it was growing more concerned about low
inflation, opening the door to a cut in interest rates there.
The Swiss franc spiked after the government announced
plans to force banks to hold more capital, a move that
effectively created instant demand for francs.
In commodity markets, the Chinese data was blamed for a
general softness in prices, with growth-attuned industrial
metals zinc, aluminium and copper hardest
hit. Platinum also tumbled as a strike began at mines in
top producer South Africa.
Gold was recuperating after its repeated failure to break
above technical resistance at $1,260 an ounce prompted investors
to take profits. Spot gold was up in London at $1,245 per
ounce, still well short of Monday's peak of $1,259.85.
Crude oil eased after an industry report showed stockpiles
of crude grew in the United States, the world's biggest oil
consumer. U.S. crude futures steadied at $96.81 a barrel,
after jumping more than a dollar overnight. Brent oil
for March delivery lost 20 cents to $108.07