European and U.S. stocks recovered earlier losses to trade little changed for the session Monday as the recent selling pressure eased, though Japanese stocks fell after tepid economic growth allowed China to replace it as the world's No. 2 economy.
In Europe, the FTSE 100 index of leading British shares was up 2.01 points at 5,277.45 while Germany's DAX rose 0.1 percent to 6,118.53. France's CAC-40 was 0.2 percent higher at 3,604.89.
In the U.S., the Dow Jones industrial average was up 0.1 percent at 10,312.61 while the broader Standard & Poor's 500 was up 0.1 percent too at 1,080.43.
The subdued opening on Wall Street came after a report showing manufacturing activity in the New York region rebounded by less than anticipated in August, compounding the market fears that the world's largest economy is losing momentum.
Though the Federal Reserve Bank of New York's Empire State Manufacturing Index rose to 7.1 in August from 5.1 in July, analysts had been anticipating a bigger rise to 8. As recently as two months ago, the index had risen to a high of 19.6.
The Empire survey was another indication that the world's largest economy was losing momentum, a fact that has been confirmed by the U.S. Federal Reserve.
Paul Ashworth, senior U.S. economist at Capital Economics, said the details of the report were even worse than the headline number, noting in particular that the new orders index plummeting to a 14-month low and the
"A frankly awful report that will only reinforce fears this could turn out to be a hard landing," Ashworth said.
The Empire survey failed to turn around the market mood, which was already fairly downbeat after figures earlier showed that Japan barely grew in the second quarter of the year — the mood in the markets has turned decidedly sour over the last few weeks amid a welter of disappointing economic news from around the world.
Government figures showed that Japan's economy grew by only 0.1 percent in the second quarter from the previous three month period largely because domestic demand fell. The tepid growth was a sharp comedown from the heady 1.2 percent expansion recorded in the first quarter and was way lower than expectations for a 0.6 percent increase.
The worry in Japan in particular is that exports — the main reason behind the modest second quarter increase — will be weighed down in coming months by the export-sapping appreciation in the value of the yen against the dollar. Last week, the dollar fell to a 15-year low of 84.75 yen
"Slower global growth and a strong yen will hit exports in the second half, making a return to recession ever more likely," said Michael Taylor, an economist at Lombard Street Research. "At the same time, there is no prospect of an end to deflation."
Despite the worse than anticipated Japanese figures, the yen continued to trade higher — by mid afternoon London time, the dollar was 1 percent lower at 85.32 yen.
However, those concerns continued to weigh on Japan's benchmark Nikkei 225 stock average, which ended down 56.97 points, or 0.6 percent, at 9,196.67.
Elsewhere in Asia, South Korea's Kospi declined 0.2 percent to 1,743.31 and Australia's S&P/ASX 200 shed 0.5 percent to 4,438.50.
Among the gainers was China's Shanghai Composite Index, up 2.1 percent at 2,661.71 amid hopes credit tightening policies will be eased. Hong Kong's Hang Seng added 0.2 percent to 21,112.12. Markets in Taiwan, Malaysia, Thailand and the Philippines gained.
Benchmark crude for September delivery was down 18 cents at $75.21 a barrel in electronic trading on the New York Mercantile Exchange.
© Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.