* China slowdown adds to worries about global recovery
* HSBC's China manufacturing gauge at 14-mth low
* Nikkei down 2 pct, ex-Japan Asia stocks off 1.2 pct
* Swiss franc, yen gain as risk is reduced
* Asia equity valuations not compelling
(Repeats to more subscribers)
By Kevin Plumberg
HONG KONG, July 1 (Reuters) - Asian stocks and commodities
began the second half of the year on a sour note on Thursday,
with Japanese stocks sliding to a seven-month low after
manufacturing data showed China's rapid economic growth was
slowing.
While China's growth had been expected to cool from
double-digit levels, the reports underscored investors' fears
that the global economic recovery may be losing momentum amid
Europe's debt crisis and persistent weakness in the U.S.
housing and labour markets.
An official survey showed the pace of Chinese manufacturing
activity slowed in June to the lowest since February, while
HSBC's separate purchasing managers' index dropped to a
14-month low, with outright drops in output and new orders.
[] []
By contrast South Korea was booming, with June export
figures showing a record trade surplus, echoing uneven economic
reports from other regions in recent weeks which have prompted
investors to dump riskier assets. []
But all eyes were on China, which has largely led the
global recovery.
"China's economy growth is at a critical stage of levelling
off after the climb," said Zhang Liqun, a Chinese government
economist, said in a statement regarding an official
manufacturing survey.
Qu Hongbin, chief economist for China at HSBC, said the
economy was clearly cooling "but fears about hard-landing are
overplayed. We expect China to achieve around 9 percent growth
in the second half, underpinned by massive ongoing investment
and robust private consumption."
Still, with Friday's June U.S. payrolls number expected to
show a shrinking labour market for the first time since
February, wary investors were shifting more money to havens
such as U.S. Treasuries and the yen.
Japan's Nikkei share average <> fell 1.7 percent to
the lowest since Nov. 30, 2009. A mix of technology stocks and
exporters were the top drags on the index.
Stock investors drew only slight comfort after a Bank of
Japan tankan survey showed Japanese manufacturers turned
optimistic about business conditions for the first time in two
years, thanks to solid exports to Asia. []
"The market wasn't expecting much from the tankan, but it
may have helped slow selling a bit," said Nagayuki Yamagishi, a
strategist at Mitsubishi UFJ Morgan Stanley Securities in
Tokyo.
Resource-related shares were under fire after the Chinese
data, dragging down Australia's benchmark index 1.8 percent
<> and the MSCI index of Asia Pacific stocks outside Japan
1.3 percent <.MIAPJ0000PUS>.
CHINA SLOWS, KOREA SPEEDS UP
Despite tumbling nearly 10 percent in the second quarter,
Asian share valuations still do not appear compelling to buyers
as analysts slash company earnings forecasts due to
expectations of weaker growth.
The MSCI ex-Japan index was trading at a multiple of 12.1
times 12-month forward earnings expectations, only slightly
lower than the five-year average of 13.2, Thomson Reuters
I/B/E/S showed.
The three-month change in 12-month forward forecasts for
earnings in Asia ex-Japan was 2 percent, the lowest in a year.
U.S. stock futures were down 0.9 percent <SPc1>, after the
S&P 500 <SPc1> and Dow Jones Industrial Average <> both
finished 1 percent lower overnight.
In the foreign exchange market, the Swiss franc and yen
benefited from an increasing distaste for other riskier
currencies.
The euro remained under pressure, even though a three-month
funding tender in the euro zone on Wednesday did not reflect a
mad scramble by banks for cash, as some market watchers had
feared. []
The single currency hit a record low against the Swiss
franc, falling 0.7 percent to 1.3084 francs <EURCHF=R>, and
lost 0.4 percent against the yen to 107.61 yen <EURJPY=R>,
closing in on an 8-1/2-year low.
Spain, which is lumped into a group of indebted European
countries facing intense market scrutiny, will hold an auction
for 5-year bonds later on Thursday. Analysts were optimistic
about the sale, though Moody's warning over its top rating on
Spanish government debt overnight could be a damper.
[]
The Australian dollar was down 0.8 percent to US$0.8330,
having shed 4 cents in less than two weeks.
Oil prices fell for a fourth consecutive day, down 1.3
percent to $74.69 a barrel <CLc1> on concerns about slowing
growth in China and a stronger U.S. dollar.
Three-month copper futures on the London Metal Exchange
were down 1 percent <CMCU3>, down 17 percent since April.
(Editing by Kim Coghill)
