Asia stocks fall on weak China data, Fed minutes

Associated Press

SEOUL, South Korea (AP) — A contraction in Chinese manufacturing and the possibility of higher U.S. interest rates dragged most Asian 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.

Hong Kong's Hang Seng was down 1.1 percent at 22,423.93 and Japan's Nikkei 225 shed 1.6 percent to 14,537.72. South Korea's Kospi fell 0.5 percent to 1,932.87.

"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 said.

Stocks were down in Taiwan, Thailand and Indonesia while benchmarks in Singapore and Australia were little changed. China's Shanghai Composite rose 0.7 percent to 2,156.83.

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.

On Wall Street, the Dow Jones industrial average lost 89.84 points, or 0.6 percent, to 16,040.56. It had been up as much as 95 points earlier in the day. The Standard & Poor's 500 fell 12.01 points, or 0.7 percent, to 1,828.75 and the Nasdaq composite fell 34.83 points, or 0.8 percent, to 4,237.95.

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 31 cents to $102.53 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained $74 cents Wednesday to $102.84.

In currencies, the euro edged up 0.2 percent to $1.3753. The dollar was down 0.3 percent 101.91 yen.