Fresh concerns about the global economy emerged
Thursday after the release of weak key economic indicators for China
and Europe, as well as data confirming the fragile state of the US
While the closely watched purchasing managers' index (PMI) for the eurozone showed the debt-hit region sliding deeper into recession territory in September, the PMI for China edged up only slightly, underscoring the downbeat mood among manufacturers in the world's second biggest economy.
At the same time, the US Labour Department said initial claims for unemployment benefits fell less than forecast, to a seasonally adjusted 382,000.
The mood among investors had already been dampened by the friction between China and Japan over a chain of disputed islands.
The London-based HSBC bank's preliminary manufacturing PMI for China nudged up in September, but only to 47.8, from 47.6 in August. This consequently helped to fuel worries about the nation's ability to sustain economic growth. A reading below 50 indicates contraction.
The new round of downbeat economic news sent shares down around the world, with China's two main stock markets slumping more than 2 per cent to hit a 43-month low.
Stocks in Europe fell back and New York's Dow Jones Industrial Average opened down 0.38 per cent.
The London-based Markit economic research group said its closely watched composite purchasing managers' index (PMI) for the 17-member currency bloc fell from 46.3 in August to 45.9 in September. This was its lowest level in more than three years.
Analysts had expected that the index for the region's service and manufacturing sectors would have edged up to 46.6 points this month after the European Central Bank announced a new bond-buying programme to help ease tensions surrounding the eurozone's debt crisis.
Instead, the indicator's preliminary reading for September fell at its fastest pace since June 2009.
"The eurozone downturn gathered further momentum in September, suggesting that the region suffered the worst quarter for three years," said Markit chief economist Chris Williamson.
He went on to warn that it was now likely that the currency bloc will slump into recession during the three months to the end of this month.
"The flash PMI is consistent with gross domestic product contracting by 0.6 per cent in the third quarter and sending the region back into a technical recession," he said.
This follows a 0.2-per-cent quarter-on-quarter contraction in the currency bloc's economy during the three months to June.
The downbeat eurozone survey came despite the composite PMI for Germany hitting a five-month high this month.
But dragging the overall indicator down was a plunge in the September reading for France, which plummeted to a 41-month low of 44.1 points. France is the eurozone's second biggest economy.
For Germany, Markit said its composite PMI in the eurozone's biggest economy had risen to 49.7 points in September, from 47 in August.
A breakdown of the German PMI showed the reading for the manufacturing sector climbing to a six-month high and the service sector breaching the key 50-point mark to hit its highest level in four months.
But, releasing the PMI for Germany, Markit said the indicator pointed to near stagnation in the nation's private sector.
"It remains too early to say, however, whether Germany will continue to buck the trend, especially as it continued to see a strong rate of loss of new orders in both manufacturing and services," said Williamson.
Markit only provided details for Germany and France in its release.
However, the PMI pointed to a sharp downturn underway across large parts of the eurozone as governments step up efforts to slash high deficit and debt levels by rolling out tough fiscal austerity programmes.
The fall in the eurozone PMI came in the wake of declines in widespread declines in production and new orders across the region, Markit said.
Equally worrying, Markit said employment in the eurozone fell for the ninth consecutive month, dropping at the fastest rate since January 2010 as the backlog of orders fell sharply.
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