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World stock markets down, Japan up on weak yen

MANILA/HONG KONG--World stock markets mostly fell Tuesday as investors awaited a slew of U.S. economic data this week to gauge when the Federal Reserve will start reducing its monetary stimulus.

In the United States, the Institute for Supply Management said Monday that factory activity grew at a much faster rate in November than in October.

The institute said its purchasing managers' index rose to 57.3 last month from 56.4 in October, despite expectations of a slight fall. The index is up 7.1 points since the beginning of the year.

A figure above 50 indicates growth while anything below points to contraction.

The news raised the prospect the Fed will start to cut back its US$85 billion-a-month bond-buying program this month as the economy shows signs of improving, said Kathy Lien, a managing director at BK Asset Management.

National Australia Bank said a December Fed taper “is back on the cards, at least for markets.”

On Wall Street the three main indexes fell on the news, while profit-takers also moved in on the first full day of trading after Thursday's Thanksgiving holiday.

“There's a lot of U.S. data out at the end of the week and a lot of people are trying to front run what we are seeing coming out of the Fed,” said Evan Lucas, market strategist of IG Markets Limited in Australia. “If they do start to have good numbers, it's not good for emerging markets.”

The Fed's US$85 billion of monthly bond purchases have kept U.S. interest rates low to encourage economic recovery but also sent a flood of money into stock markets worldwide in search of higher returns. A jobs report on Friday will be crucial in shaping expectations about whether the U.S. central bank will start reducing its stimulus this month or next year.

European benchmarks fell and U.S. stock futures were slightly lower, auguring a muted opening on Wall Street. Britain's FTSE 100 fell 0.3 percent to 6,573.78 and Germany's DAX was 0.4 percent lower at 9,367.41. France's CAC-40 was down 0.9 percent at 4,247.15.

In Asia, markets mostly fell on Tuesday following Wall Street's losses after a better-than-expected U.S. manufacturing report heightened speculation that the Federal Reserve will begin winding down its stimulus this month.

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