Global stocks drop on weaker Chinese manufacturing

LONDON (AP) -- Global markets began the New Year on a subdued note, falling Thursday after a Chinese survey suggested the world's second-largest economy might be slowing.

Major indexes closed out 2013 at or near record highs, but investors seemed reluctant to chase more gains in the new year.

The selling pressure began after a Chinese industry group said its purchasing managers' index for the manufacturing sector — a broad gauge of activity — declined to 51 points from November's 51.4 on a 100-point scale on which numbers above 50 indicate expansion. A separate survey by HSBC Corp. declined to 50.5 from November's 50.8.

"This is the first moderation in six months, suggesting that the growth recovery since mid-July might have started to lose some stream," Bank of America economists Xiaojia Zhi and Ting Lu said in a report.

In thin trading conditions, Britain's FTSE 100 closed down 0.5 percent at 6,717.91 while France's CAC-40 fell 1.6 percent to 4,227.28. Germany's DAX shed 1.6 percent to 9,400.04.

Shares in Fiat bucked the trend, soaring 16.4 percent in Milan on news the company had reached an agreement to buy the remaining shares in Chrysler.

Wall Street opened lower despite a survey showing the U.S. manufacturing sector grew at a healthy pace in December. The Dow was 0.6 percent lower at 16,473.91 and the S&P 500 fell 0.7 percent at 1,835.52.

In Asia, China's benchmark Shanghai Composite Index shed 0.3 percent to 2,109.3 while Hong Kong's Hang Seng Index fell 0.1 percent to 23,278.0.

Seoul's main index lost 2.2 percent, while Taiwan's Taiex was flat and India's Sensex added 0.5 percent. Benchmarks in Malaysia and Thailand also fell. Tokyo was closed for the New Year's holiday.

In currency markets, the dollar fell 0.4 percent to 104.89 yen while the euro fell 0.6 percent to $1.3667.

The benchmark oil contract lost $2.01 to $96.41 per barrel in electronic trading on the New York Mercantile Exchange.