Shares, euro sag after euro zone PMIs disappoint

By Marc Jones

LONDON (Reuters) - World shares weathered soft readings on Chinese and Japanese manufacturing on Thursday that merely drove expectations of more policy stimulus there, though lacklustre euro zone data was less well received.

European stock markets opened higher, spurred by multi-year highs in Asia, but the mood soured after sluggish euro zone and German purchasing manager data followed another dire set of numbers from France.

It meant that, overall, euro zone private sector business growth was weaker than forecast, despite a big fall in the euro that could support exports and the launch in March of a much-awaited sovereign bond buying programme from the European Central Bank.

"There was very little positive to take away from the French numbers," said Timo Del Carpio a European economist at RBC in London. "We will have to wait and see, but so far the signal is that it is a weak start to Q2."

The euro headed lower against the dollar but European bond markets largely shrugged off the data as they steadied after UK Gilts and German Bunds had led a lively sell-off on Wednesday.

Traders were still cheering what had been another stellar session for stocks in Asia.

Among the milestones were a 15-year peak for Japan, seven years for both China and Taiwan and a near four-year top for South Korea. MSCI's broadest index of Asia-Pacific shares outside Japan added 0.5 percent to reach ground last trod in early 2008.

The gains came despite a dip in the HSBC China manufacturing PMI to a one-year trough of 49.2 in April, when the consensus had been for it to hold steady at 49.6.

Neither was the news bright from Japan where the Markit/JMMA flash PMI fell to 49.7 in April from a final 50.3 in March.

But that merely added to speculation that further easing would be required from central banks in both countries.

Japan's Nikkei (.N225) was up 0.3 percent while South Korea (.KS11) gained 1.4 percent. Shanghai stocks (.SSEC) climbed 1 percent, with investors still emboldened by a commentary in state media saying the bull market "has just begun".

"Investors only care about the attitude of the government, which has so far appeared tolerant (of the rise)," said Du Changchun, analyst at Northeast Securities in Shanghai.

With U.S PMI's also due later, early futures prices pointed to a subdued start for Wall Street after 0.4-0.5 percent gains for the main U.S. markets on Wednesday.

FEELING OF GILT

Sterling, which had jumped alongside UK Gilt yields on Wednesday after minutes of the Bank of England's last policy meeting were taken as less than dovish by a crowded market, gave back some of the gains to sit at $1.4980 in early trading.

The New Zealand dollar took a hit after a central banker said rate cuts could be considered if domestic demand and inflationary pressures were to weaken.

The currency shed half a U.S. cent to $0.7562 (NZD=D4) as Reserve Bank of New Zealand Assistant Governor John McDermott emphasised that policy needed to stay stimulative to get inflation higher.

The euro, which lost ground to stand at $1.0684 (EUR=), remains stuck in the $1.0520-$1.0849 range of the past few weeks. Traders remain sensitive to worries about Greece, but clear signals on that front are unlikely before Monday's Eurogroup meeting.

Against the yen, the dollar was firm around 119.86 (JPY=) and on track for its fourth straight session of gains.

In commodity markets, spot gold (XAU=) was down at $1,188.61 an ounce having suffered its sharpest single-session loss since March 6 on Wednesday.

Oil prices were a fraction softer with Brent (LCOc1) quoted down 40 cents at $62.33 a barrel, while U.S. crude (CLc1) dipped 29 cents to $55.87.

(Reporting by Marc Jones; editing by John Stonestreet)