Disappointing business surveys intensify growth fears

Fri Aug 21, 2015 6:10am EDT
 
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By Jonathan Cable and Koh Gui Qing

LONDON/BEIJING (Reuters) - Signs China's slowdown is getting worse and weak growth in Europe have further damaged the outlook for the global economy, sending stocks and commodity prices reeling on Friday.

China's vast factory sector shrank at its fastest rate in almost 6-1/2-years in August, a private survey showed, pushing investors who fear China's sagging economy will translate into slower global growth to take refuge in gold and bonds.

World markets had already been on edge after China's surprise devaluation of the yuan last week and a near-collapse in its stock markets in early summer.

"Uncertainty about China growth is now the main swing factor in markets," said Tim Condon, an economist at ING Group in Singapore.

"Today's data reinforced the doubts about global growth."

The preliminary Caixin/Markit China Manufacturing Purchasing Managers' Index (PMI) stood at 47.1 in August, well below a Reuters poll median of 47.7 and down from July's final 47.8.

It was the worst reading since March 2009, in the depths of the global financial crisis, and the sixth straight one below the 50-point level, which separates growth in activity from contraction on a monthly basis.

Euro zone business growth unexpectedly accelerated this month but remained tepid, according to surveys out of Europe, while a similar index due later from the United States is expected to show only a modest pick up in factory growth.   Continued...

 
A man walks past the London Stock Exchange in the City of London October 11, 2013. REUTERS/Stefan Wermuth