* Weak euro zone, Chinese data hits stock markets
* Euro falls vs dollar after PMI data; Swiss franc, yen gain
* Ukraine clashes hit emerging market stocks
By Francesco Canepa and Nigel Stephenson
LONDON, Feb 20 Shares fell and safe-haven
currencies rose on Thursday after downbeat surveys of economic
activity in China and parts of Europe raised concerns about the
withdrawal of monetary stimulus.
A contraction in Chinese manufacturing set the gloomy tone
which was reinforced by data showing an unexpected stall in
activity in parts of the euro zone.
"The macro data is starting to be not as good as before and
some red lights are appearing in our model," Johann Nouveau,
partner at Seven Capital Management, a hedge fund which uses
mathematical models to gauge economic data and market momentum.
"We're still long stock markets but we're decreasing our
exposure as the probability of a sharp drop is increasing."
Escalating conflict in the Ukrainian capital, Kiev, hampered
developing country stocks and MSCI's emerging market index
fell 1.1 percent.
Its world equity index, which tracks shares
in 45 countries, was down 0.5 percent at a six-day low, having
hit its highest in almost a month on Wednesday. U.S. futures
were pointing to a lower start on Wall Street, with March
contracts on the S&P 500 index down 0.3 percent.
In Europe, the benchmark FTSEurofirst 300 index
lost 0.7 percent, with mixed PMI data from Germany, the euro
zone's powerhouse, barely lifting the mood.
Markit's Composite Purchasing Managers' Index for the euro
zone dipped in February, although it held just below January's
31-month high. The service sector in France shrank at its
fastest pace in nine months.
"The outcome was much weaker than expected and it clearly
shows how business sentiment is failing to gain momentum as
headwinds to growth are still well alive," Annalisa Piazza,
market economist at Newedge Strategy, said of the French data.
Earlier, Asian stocks tumbled after the preliminary China
Purchasing Managers' Index from HSBC/Markit for February came in
at a seven-month low, falling deeper into contraction.
"You have to expect Beijing to act if the economy slows down
more from here, because they cannot proceed with their reform
agenda without maintaining a certain level of growth," said
Linus Yip, a Hong Kong-based strategist at First Shanghai
The data from the world's second largest oil consumer
dragged Brent crude below $110 a barrel.
SAFE HAVENS & STIMULUS
The Swiss franc, which is backed by a stable economy and
tends to do well at time of market jitters, rose 0.2 percent
against the U.S. dollar, and the yen - another safe-haven
currency - also gained.
The dollar, however, was still firm against other major
currencies even after three Federal Reserve officials said on
Wednesday that the U.S. economy was gaining traction despite a
recent slowdown caused by bad weather, allowing the central bank
to stick to its plan to wind down bond-buying this year.
The dollar index, which measures the greenback
against a basket of currencies, was 0.2 percent higher at 80.28.