Monday, October 1, 2012

Asian markets down on China as manufacturing slips, Europe worries persist


HONG KONG: Asian shares were broadly lower on Monday as Chinese manufacturing activity slipped, Japanese business confidence fell, and worries persisted over debt-ridden Spain.

In Tokyo the benchmark Nikkei 225 index closed down 0.83 per cent, or 73.65 points, to 8,796.51, and Singapore slipped 0.33 per cent in the afternoon, but Sydney's S&P/ASX 200 closed 0.06 per cent, higher at 4,387 points.

Hong Kong, Shanghai and Seoul were all closed for public holidays.

The falls came after official data showed manufacturing activity in China, the world's second-biggest economy, contracted for a second straight month in September.

The government's purchasing managers' index (PMI) stood at 49.8, falling short of expectations. A PMI reading above 50 indicates expansion, while one below points to contraction.

It came after British bank HSBC at the weekend released its own PMI of 48.4, its 11th consecutive month of contraction.

"The manufacturing side is still very weak," said independent economist Andy Xie, citing sluggish exports and a property slump as factors. "You go around the country, you can see all the cranes standing there, not working."

China's economic growth slowed to 7.6 per cent in the three months to June, its weakest since the height of the global financial crisis three years ago.

Beijing has expressed confidence it will achieve its 2012 economic growth target of 7.5 per cent, though that would mark a sharp slowdown from 9.3 per cent last year and 2010's 10.4 per cent.

Lee Kok Joo, head of research at Phillip Securities in Singapore, told Dow Jones Newswires: "The macro picture is still in contraction mode. Investors are still very cautious of going into the market."

In Tokyo, the Bank of Japan said confidence among large manufacturers worsened in the quarter ended September, with businesses suffering from a territorial spat with Beijing over disputed islands in the East China Sea.

Auto giants Toyota and Nissan said last week they would cut production in China, Japan's largest trading partner, because demand for Japanese cars has dropped.

Europe's debt crisis was also in investors' minds, with Spain's economic descent accelerating in recent days amid increasing anti-austerity protests, and Madrid now appearing increasingly likely to apply for a sovereign bailout.

Madrid has unveiled cuts of 39 billion euros (US$50 billion) in government spending, including a third straight year of salary freezes for civil servants, reducing its deficit to 2.8 per cent of GDP in 2014.

But it is projecting debt to reach 85.3 per cent of GDP in 2012 and 90.5 per cent in 2013.

The single currency was changing hands at $1.2843 and 99.93 yen, down from $1.2856 and 100.12 yen in New York late Friday, while the dollar was flat at 77.80 yen, from 77.88 yen.

On oil markets New York's main contract, light sweet crude for delivery in November, shed 67 cents to US$91.52 a barrel and Brent North Sea crude for November retreated 50 cents to US$111.89.

Gold was at US$1,765.80 at 0640 GMT compared with US$1,778.10 on Friday.

Taiwan's weighted index fell 0.51 per cent, or 39.44 points, to 7,675.72.

Taiwan Semiconductor Manufacturing Co shed 1.0 percent to NT$88.90 while leading smartphone maker HTC gained 2.29 per cent at NT$290.5.

Wellington closed off 0.11 per cent, or 4.12 points, to 3,830.03.

Telecom Corp of New Zealand was 0.63 per cent down at NZ$2.36.


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