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May 28, 2017

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Asia shares down as China manufacturing data weighs

SEOUL/HONG KONG--Asian stock markets were dampened by a weak China manufacturing survey Thursday, but European stocks opened higher. Japan gained on the prospect of a stronger dollar after Fed minutes showed policymakers are leaning toward their first rate hike since the 2008 financial crisis.

Britain's FTSE 100 added 0.2 percent to 6,771.49 and Germany's DAX gained 0.4 percent to 9,354.87. France's CAC 40 was up 0.4 percent to 4,259.54. Futures augured more gains on Wall Street. S&P 500 futures rose 0.1 percent and Dow Jones futures added 0.2 percent.

Asian markets mostly fell Thursday, with downbeat Chinese manufacturing data dragging down Hong Kong and Shanghai as concerns grew about the pace of recovery in the world's second-largest economy.

But Tokyo bucked the trend, gaining 0.85 percent, or 131.75 points, to 15,586.20 after U.S. Federal Reserve minutes suggested interest rates may be hiked sooner than expected.

Seoul dropped 1.38 percent, or 28.57 points, to 2,044.21, Hong Kong lost 0.66 percent, or 165.66 points, to 24,994.1, Shanghai slid 0.44 percent, or 9.75 points, to 2,230.46 while Sydney ended flat, edging up 4.3 points to 5,638.9.

Traders were focused on China as the HSBC preliminary purchasing managers index (PMI), which tracks activity in the country's factories and workshops, slipped to 50.3 in August.

The figure was down from a final reading of 51.7 in July and was the lowest for three months, the British banking giant said in a statement.

The indicator is a closely watched gauge of the health of the Asian economic powerhouse, with a reading above 50 indicating the sector is expanding.

"Today's data suggest that the economic recovery is still continuing but its momentum has slowed again," HSBC economist Qu Hongbin said in the statement.

The downward trend in Asian markets came despite a positive lead from Wall Street, where the Dow Jones Industrial Average closed up 0.35 percent at 16,979.13 on Wednesday.

Early Rate Hike?

Minutes from the July 29-30 Fed meeting showed policy makers increasingly at odds over how strong the U.S. labor market is and what that means for inflation — a key issue in planning rate hikes next year.

The intensifying debate signaled an increased, albeit still measured, level of hawkish sentiment in the Fed that could speed up any rate hike.

Easing fears about the geopolitical crisis in Ukraine has fuelled investor optimism ahead of a speech by the head of the U.S. Federal Reserve.

Slow growth, low interest rates and tepid inflation on both sides of the Atlantic will be in focus when heads of the U.S. and European central banks meet this week in Jackson Hole, Wyoming.

All eyes will focus on Janet Yellen, the Federal Reserve chair, and Mario Draghi, her counterpart at the European Central Bank, with observers looking and listening for signs of what they plan for interest rates.

Yellen is facing calls to begin raising interest rates soon after U.S. measures aimed at stimulating the world's biggest economy are wound up in October.

Gold traded at US$1,282.27 an ounce at 1045 GMT compared to US$1,294.76 an ounce late Wednesday.

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