Europe drags on world economy, U.S. fares better
By Lucia Mutikani and Jonathan Cable
WASHINGTON/LONDON (Reuters) - Prospects for a sustained global economic recovery darkened on Thursday as sputtering factory activity in Europe overshadowed more upbeat data from Asia, even as central banks are running out of policy options and are reluctant to do more.
United States data was mixed. Factory activity unexpectedly cooled last month, but further signs of strength in the labor market suggested the world's largest economy remained on a more self-sustaining recovery path.
U.S. manufacturing data showed that the rate of growth slowed in February as orders fell. However, the number of Americans filing new claims for jobless claims hovered near a four-year low last week.
Data also showed that Americans held back with their personal expenditure in January, showing a smaller rise than expected against a backdrop of mild inflation pressure.
In Europe, factory activity at best stagnated, and in Spain and Greece it contracted sharply, according to the latest purchasing managers' indexes. Chinese and Indian manufacturing is growing, but at a more modest pace than in the recent past.
The data comes just a day after the European Central Bank pumped 530 billion euros of cash into the banking system, likely its last such salvo in a battle to bring down yields on government bond and stave off a credit crunch.
But despite another bailout for Greece and success in lowering borrowing costs - Spain sold 4.5 billion of government bonds on Thursday at lower yields than previous sales - Europe is still casting a dark shadow over the world economy.
"Clearly the euro zone crisis is having an impact upon global activity, and that is going to be a theme for some time to come," said Peter Dixon at Commerzbank. Continued...