Manufacturing growth slowed across the globe in May as the pace of new orders eased amid growing uncertainty over what damage Europe's debt crisis might do to the fragile economic recovery.
China's official purchasing managers' index released on Tuesday fell in May to 53.9 from 55.7 in April, just below market expectations but still the 15th straight month above the threshold at 50 that separates expansion from contraction.
A companion index compiled by British research firm Markit for HSBC dropped to an 11-month low of 52.7 in May from a downwardly revised 55.2 in April.
"Details suggest that overheating risks in China's economy have receded under external weaknesses and domestic tightening," Citigroup economists noted.
In the euro zone, manufacturing activity expanded in May at a considerably more sluggish pace than April's 46-month high.
The United Kingdom managed to buck the trend, with the index holding at April's 15-year high, but economists expect that while May will mark the tenth month of expansion for manufacturers in the United States, it will be at slower rate than April.
The Markit Eurozone Manufacturing Purchasing Managers' Index for May sank to 55.8 from 57.6 in April, nudged down from an earlier flash estimate of 55.9, but in the United Kingdom, the index remained at April's 58.0.
The 16-nation bloc and its common currency have been hit by waves of insecurity churned up by the region's debt crisis and fears that troubles in Greece may spread to other peripheral economies.
"There has been a slowdown in growth globally and in the euro zone there is subdued domestic demand due to the austerity measures implemented in some countries," said Luigi Speranza at BNP Paribas.
Separate data earlier from the euro zone showed unemployment, a lagging indicator, inched up in April to a near 12-year high of 10.1 percent.
The May global PMI surveys are being closely watched by investors because they could shed light on how the government debt crisis in the euro zone is impacting the world economy.
A Reuters poll on Friday showed surging emerging economies will push global growth to a faster rate this year than previously thought, but the upward momentum will run out next year.
The slower growth suggested by the different purchasing manager data weighed on shares.
The pan-European FTSEurofirst 300 index of top shares was down around two percent, the MSCI index of Asia Pacific stocks outside Japan fell more than 2 percent. Shanghai stocks ended the morning with a fall of around 1 percent.
Since China has been such an engine of global growth as the world emerged from its deepest recession in decades, a sharp slowdown in China could deal a blow.
"The result indicates weakening of momentum in the manufacturing sector and confirms our expectation that GDP growth will slow sharply in Q2 and continue decelerating in Q3," Dariusz Kowalczyk, SJS Markets chief investment strategist in Hong Kong said.
South Korea's May PMI hit a five-month low of 54.61 compared to 57.06 in April. The PMI coincided with official data showing that the country's exports in May jumped close to 42 percent over a year earlier and the average exports per working day hit a record $1.84 billion.
India's PMI, based on a survey of 500 firms, surged to a 27-month high of 59.0 from 57.2 in April. It is also the 14th month that the indicator has been above 50.
GDP figures on Monday showed that the economy expanded 8.6 percent in the March quarter, compared with a year earlier, the strongest pace in six months.
"The Indian economy is hardly pausing for breath," said HSBC economist Frederic Neumann.
Japan's manufacturing sector grew in May at its fastest pace in almost four years after a slowdown in April. The Nomura/JMMA Japan Manufacturing Purchasing Managers Index rose to a seasonally adjusted 54.7 from 53.8 the previous month.
Nomura economist Minoru Nogimori said high export orders suggested Japan's shipments will stay strong, particularly to Asia.
"Although there are concerns over financial market disruption triggered by government debt problems in Europe, we expect the export-led manufacturing recovery to continue."
Many Asian countries are still showing double-digit gains in exports over year-earlier months despite the weeks of financial market turmoil triggered by the debt crisis.
"But the key word here is 'yet' and there still must be some caution about the near-term strength of external demand," said Brian Jackson, senior emerging market strategist at Royal Bank of Canada in Hong Kong.
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