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By Carolyn Cohn
LONDON, March 22 (Reuters) - World stocks hit their lowest in over a week on Thursday and Wall Street was set open in the red as manufacturing slumps in China and the euro zone fuelled global growth concerns.
The downbeat data triggered flows back into safe-haven assets that boosted German government debt, while it also sent the euro lower and left the common currency looking vulnerable to further losses.
The HSBC flash Purchasing Managers' Index, the earliest indicator of China's industrial activity, fell to 48.1 in March from February's four-month high of 49.6.
The euro zone's leading economies Germany and France both reported an unexpected contraction in manufacturing activity. , sending Markit's Composite PMI for the region down to 48.7 in March from 49.3 in February.
Anything below 50 is viewed as a contraction.
"When you get numbers like this out of the euro zone it definitely puts the growth outlook into question and points to a mild recession," said Niels Christensen, currency strategist at Nordea in Copenhagen.
"There should be a widening of rate differentials in favour of the dollar, so a lower euro/dollar will be the result".
MSCI's main world equity index fell 0.4 percent to its lowest in eight days after hitting its highest level since August earlier in the week.
U.S. stock index futures pointed to losses of 0.5-0.6 percent at the Wall Street open.
Recent comments by the U.S. Federal Reserve have cut expectations of further quantitative easing, or asset buying. Previous rounds of QE had supported risky assets.
"Everyone was so focused on Greece and the debt crisis is still on everyone's mind, but attention is focusing back on to fundamentals," said DZ Bank rate strategist Michael Leister.
"The PMIs alone don't make for such a big story but they fit into the bigger picture risk-off theme that we're seeing."
European stocks weakened for a fourth straight session, heading for their longest negative run in four months. They fell 1 percent to 10-day lows and emerging stocks fell 0.4 percent to two-week lows.
The euro dropped 0.4 percent against the dollar to $1.3162 and 1 percent against the yen to 109.
The dollar lost 0.7 percent to 82.79 yen although it gained 0.2 percent against a basket of major currencies.
Brent crude oil was down 0.5 percent at $123.55 a barrel.