SEOUL, South Korea - A contraction in Chinese manufacturing and the possibility of higher U.S. interest rates dragged global stock markets lower Thursday.
China's manufacturing tumbled to a
seven-month low in February, according to the preliminary results of a HSBC
survey of factory purchasing managers.
That added to negative sentiment from
news that some U.S. Federal Reserve policymakers believe short-term interest rates should be raised sooner than markets had been anticipating.
European stocks lost ground in early
trading, with Germany's DAX down 1.2 percent at 9,540.51. Britain's FTSE 100
dropped 0.5 percent to 6,764.77 and France's CAC 40 lost 0.6 percent to
Wall Street was poised for a sluggish
day with Dow Jones and S&P 500 futures both down 0.2 percent.
Earlier in Asia, Hong Kong's Hang Seng
closed 1.2 percent lower at 22,394.08 and Japan's Nikkei 225 shed 2.2 percent
to 14,449.18. South Korea's Kospi fell 0.6 percent to 1,930.57.
"Markets will see a correction
for a while as China's manufacturing data was not great and the Fed minutes
didn't have favorable news," said Bae Sung-young, a market analyst at
Hyundai Securities Co. in Seoul.
Overall, China's economy is "on
track to recovery" so the impact on markets isn't likely to be lasting, he
Stocks were down in Taiwan, Thailand
and Singapore while benchmarks in Indonesia and Australia had marginal gains.
After trading in positive territory, China's Shanghai Composite edged down 0.2
percent to 2,138.78.
Minutes of the Fed's last meeting
revealed that some policymakers "raised the possibility that it might be
appropriate to increase the federal funds rate relatively soon."
That came as an unwelcome surprise to
many investors, who haven't had to worry about increases in the Federal
Reserve's benchmark short-term interest rate for about five years.
HSBC Corp. said the preliminary
version of its monthly purchasing managers' index fell to 48.3 from January's
49.5 on a 100-point scale. Numbers below 50 show activity contracting.
China's economic activity has slowed
steadily as the government tries to cool an investment boom and encourage more
sustainable growth based on domestic consumption.
Investors are waiting for a Group of
20 meeting of finance ministers and central bankers in Sydney this weekend.
They are expected to discuss how to assuage jitters in emerging markets as the
U.S. Fed reduces stimulus measures.
In energy market, benchmark U.S. oil
for March delivery was down 24 cents to $102.59 a barrel in electronic trading
on the New York Mercantile Exchange. The contract gained 74 cents to $102.84 on
In currencies, the euro edged down 0.2
percent to $1.3701. The dollar was down 0.4 percent 101.84 yen.