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European markets fail to follow Asian gains as downbeat economic surveys darken mood
LONDON (AP) ' European stocks failed to keep up with gains in Asia on Thursday as downbeat reports on the manufacturing sector darkened investors' moods.
Surveys into the state of the industrial sectors ' the so-called purchasing managers' index ' showed they had contracted in August, both in the eurozone and the U.K.
Industrial production had been one of the key pillars of growth in the eurozone, particularly in big exporting economies like Germany's. Coupled with recent statistics showing consumer confidence is waning, the reports suggested growth is likely to slow further in coming months.
"The eurozone is clearly struggling in the face of tighter fiscal policy across the region, heightened sovereign debt tensions and financial market turmoil," said Howard Archer, economist at IHS Global Insight.
He suggests that the ECB will stop raising interest rates and could eventually start cutting them if the economic indicators keep pointing downwards.
After a largely positive week to end the month of August, European stocks were all down. Britain's FTSE 100 fell 0.5 percent to 5,370.04 while France's CAC-40 fell 1.1 percent to 3,220.62. Germany's DAX fell 1.7 percent to 5,685.43.
U.S. stocks were also poised to fall. Dow futures fell 0.4 percent to 11,561 while the broader S&P 500 futures declined 0.5 percent to 1,211.90.
Investors will keep an eye out for the U.S. survey of its own manufacturing sector, which is expected to decline as well, and set up their positions ahead of Friday's important jobs report for August.
The payrolls data are one of the most closely watched economic indicators because they signal the strength and confidence of consumer spending in the world's largest economy. The U.S. economy is expected to have added 80,000 jobs, too little to bring the unemployment rate down.
Earlier in Asia, traders had built on a strong performance on Wall Street the previous day ' driven by hopes that the Federal Reserve may unveil more monetary stimulus ' to push indexes mostly higher.
Some investors were betting that the Fed may announce a third round of government bond purchases ' known as quantitative easing III or QE3 ' to support the economy because of worries the U.S. may slide back into recession. Analysts say a weak U.S. jobs report on Friday could push the Fed to act.
Japan's benchmark Nikkei 225 advanced 1.2 percent to close at 9,060.80 while Hong Kong's Hang Seng edged up 0.2 percent to close at 20,585.33.
South Korea's Kospi was nearly unchanged, ending at 1,880.70 and Australia's S&P/ASX 200 rose 0.3 percent to finish at 4,307.50. Taiwan's benchmark gained but Singapore's declined.
Mainland Chinese shares lost ground Thursday, with the benchmark Shanghai Composite Index slipping 0.4 percent, or 11.3 points, to 2,556.04 while the Shenzhen Composite Index fell 0.6 percent, or 6.59 points, to 1,136.75.
In currencies, the euro dropped to $1.4280 from $1.4380 late Wednesday in New York. The dollar rose to 77.09 yen from 76.60 yen.
Benchmark oil for October delivery fell 23 cents to $88.58 in electronic trading on the New York Mercantile Exchange. Crude rose 9 cents to settle at $88.81 on Wednesday.
In London, Brent crude for October delivery fell 91 cents to $113.94 on the ICE Futures exchange.
Kelvin Chan in Hong Kong and Fu Ting in Shanghai contributed to this report.