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May 28, 2017

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World stocks hurt by drop in Chinese manufacturing

AMSTERDAM/HONG KONG--Asian stocks sank Thursday after a weak report on Chinese manufacturing, while European markets were mixed after an upbeat economic report there led to a surge in the value of the euro.

In Europe, a survey by financial information company Markit showed manufacturing output in the eurozone was at its highest level in nearly three years, leading to a sharp rise in the euro — a negative for European exporters.

In early European trading, Germany's DAX slipped 0.1 percent to 9,715.41 and the FTSE 100 index of leading British companies lost 0.1 percent to 6,820.00. But France's CAC 40 was up 0.2 percent to 4,335.56.

U.S. stocks were poised to fall, with Dow futures down 0.2 percent and broader S&P 500 futures off 0.1 percent.

Markets across Asia fell Thursday after data showed Chinese manufacturing activity shrank in January for the first time in six months.

Regional markets were also given a soft lead from Wall Street, which ended mixed as a below-par corporate earnings season continued.

Tokyo fell 0.79 percent, or 125.07 points, to close at 15,695.89, giving up earlier gains as the downbeat sentiment sent traders into the yen and away from the dollar.

Sydney fell 1.07 percent, or 56.8 points, to 5,263.0. Seoul lost 1.16 percent, or 22.83 points, to close at 1,947.59 on news that South Korean economic growth slowed in the October-December quarter.

Shanghai slipped 0.47 percent, or 9.57 points, to 2,042.18 and Hong Kong fell 1.51 percent, or 348.35 points, to 22,733.90.

Banking giant HSBC said Thursday that preliminary results showed manufacturing activity in China contracted sharply in January, adding to recent concern about the world's number two economy.

The bank's early reading on its purchasing managers' index for this month came in at 49.6, well down from 50.5 in December and its lowest since July. A reading above 50 indicates growth, while anything below signals contraction.

Most of the bank's sub-indices were also lower, including key new export orders, the survey found.

HSBC economist Qu Hongbin said in a statement the shrinkage was mostly because of cooling domestic demand and added: "As inflation is not a concern, the policy focus should tilt toward supporting growth" to avoid another economic slowdown as seen in the last quarter of 2013.

Official figures at the start of the week showed the Chinese economy grew 7.7 percent last year — the same as 2012, which was the slowest since 1999. It also showed that expansion in the October-December quarter came in at 7.7 percent, weaker than the 7.8 percent in the previous three months.

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