U.S. Markets open in 8 hrs.

Weak China manufacturing hits Asia stock markets

Kelvin Chan, AP Business Writer

A man walks by an electronic stock board of a securities firm in Tokyo, Wednesday, July 24, 2013. Asian stock markets were mostly lower Wednesday after a survey showed Chinese manufacturing activity fell to its lowest point in nearly a year. Japan's Nikkei 225 fell 0.6 percent to 14,692.83. (AP Photo/Itsuo Inouye)

HONG KONG (AP) -- Asian stock markets were mostly lower Wednesday after a survey showed Chinese manufacturing fell to its lowest point in nearly a year.

Stock benchmarks in Japan and China sank after HSBC said its preliminary China purchasing managers index for June declined more than expected to an 11-month low, another sign of a deepening economic slowdown.

The widely watched private report is one of the earliest indicators for clues to the health of China's economy, the world's second biggest. Analysts say the preliminary report paves the way for more disappointment when the full version and an official PMI are released next month.

The Shanghai Composite Index in mainland China tumbled 1.3 percent to 2,018.00 and the smaller Shenzhen Composite Index fell 0.5 percent to 969.16.

Japan's Nikkei 225 dropped 0.5 percent to 14,699.94 and Hong Kong's Hang Seng shed 0.3 percent to 21,853.42. Benchmarks in Taiwan, the Philippines and Indonesia also slid.

South Korea's Kospi was 0.1 percent higher at 1,906.56 and Australia's S&P ASX 200 was up 0.2 percent to 5,027.50.

The HSBC PMI survey, which covers 420 businesses, found that output, new orders and employment all decreased at faster rates.

"Whenever we see bad economic data from China that's not good news," said Jackson Wong, vice president at Tanrich Securities.

While the disappointing manufacturing report dragged down Asia stocks, it also raised investors' hopes that Beijing would consider new stimulus for China's economy following two straight quarters of declining growth. A day before, newspapers reported on comments by China's top economic official, Premier Li Keqiang, who promised that growth would not fall below 7 percent.

"We believe that such a negative scenario will not materialize and that China will announce new stimulus measures soon — modest and targeted ones but sufficient for growth to achieve this year's 7.5 percent goal," Credit Agricole CIB strategist Dariusz Kowalczyk said in a report. "The worse the PMI the bigger the measures would be."

However, Wong was more skeptical that Beijing would take action.

"If we don't see any concrete evidence that anything will be rolled out in short time, the market is reluctant to speculate on that," he said. "They won't buy into this hype."

In the U.S., the Dow Jones industrial average rose 0.1 percent to close at 15,567.74. The broader Standard & Poor's 500 dropped 0.2 percent to 1,692.39 while the Nasdaq composite fell 0.6 percent, to 3,579.27.

In currency markets, the dollar rose to 99.67 Japanese yen from 99.41 yen late Tuesday. The euro fell to $1.3210 from $1.3226.

Benchmark crude for September delivery was down 12 cents to $107.11 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 29 cents to settle at $107.23 on Monday.