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May 26, 2017

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Stocks down on worries about China, Ukraine

FRANKFURT/HONG KONG--Global stock markets mostly fell Monday amid worries over the crisis in Ukraine and after a survey showed Chinese manufacturing shrank in April for the fourth month in a row.

The threat of further sanctions against Russia from the U.S. and the European Union has periodically unsettled markets over the past few weeks, although so far the measures have targeted individuals and not entire Russian industries. Worries over the Chinese economy, the world's No. 2, have also been one of the main drivers across markets this year.

"Financial markets begin the week, clouded by concerns over the situation in Ukraine, and a slightly deeper-than-previously-estimated contraction in China's manufacturing sector," said Jennifer Lee, an analyst at BMO Capital Markets.

In Europe, Germany's DAX fell 1.35 percent to 9426.9 while France's CAC 40 was off 1.1 percent at 4408.29 after a weekend full of disquieting news from the conflict between Ukrainian security forces and pro-Russian separatists. Separatists stormed a police station in the town of Odessa and freed dozens of allies jailed after clashes that left more than 40 dead. British stock markets were closed for a public holiday.

On Wall Street the Dow slipped 0.28 percent, the S&P 500 shed 0.13 percent and the Nasdaq dipped 0.09 percent.

U.S. shares had started on a high after the Labor Department said the economy added 288,000 jobs in April, far above the 210,000 projected by analysts and the most in more than two years.

Coupled with upward revisions for the previous two months, the figures showed a firm rebound in hiring after a tepid winter pace that had spurred worries of a more fundamental downshift in activity.

Traders will be scrutinizing Federal Reserve chief Janet Yellen's testimony to Congress on Wednesday to see if she provides any clues about the state of the U.S. economy and the bank's plans for it stimulus program.

Asian markets were mixed Monday following losses on Wall Street and after a survey indicated manufacturing activity in China was contracting at a faster rate than initial results suggested.

Hong Kong tumbled 1.28 percent, or 284.34 points, down at 21,976.33, while Sydney was flat, edging up 4.14 points to 5,462.2 and Shanghai reversed early losses to also end flat, edging up 0.99 points to 2,027.35. Singapore was down 0.11 percent in the afternoon.

Tokyo, Seoul and Bangkok were closed for public holidays.

Banking giant HSBC said Monday its purchasing managers index (PMI) for China last month came in at 48.1, a tad up from the 48.0 in March but weaker than the 48.3 reported in its preliminary report on April 23.

The result adds to fears for the world's number two economy and key driver of global growth following a slew of weak data recently, including on trade and investment.

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

Last week the government's official PMI reading came in at 50.4 for April from 50.3 in March.

Monday's figures showed domestic demand deteriorated at a slower pace but remained sluggish, while the new export orders and employment sub-indices both contracted, Qu Hongbin, a Hong Kong-based economist with HSBC, said in the statement.

"These indicate that the manufacturing sector, and the broader economy as a whole, continues to lose momentum," he said.

Gold fetched US$1,308.83 at 0805 GMT compared with US$1,285.81 on Friday.

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