Downbeat China manufacturing activity added to gloom in most Asian stock markets on Thursday, while emerging market currencies faltered as the dollar charged ahead after the U.S. Federal Reserve's latest minutes hinted at stimulus tapering. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS shed about 1.3 percent to its lowest point since middle of last week. But Japan's Nikkei stock average .N225 bucked the region, rising 1.6 percent as the yen weakened against the dollar and on plans by a major government fund to invest more of its $2 trillion funds in riskier assets. The softer China manufacturing and Fed speculation also weighed on emerging market currencies, sending the Indonesian rupiah to its lowest point in nearly five years. Activity in China's vast factory sector grew at a milder pace in November on shrinking new export orders, the preliminary private Flash Markit/HSBC Purchasing Managers' Index (PMI) showed, raising concerns that China's economy could lose some vigor in the fourth quarter. A sub-index measuring new export orders fell to a three-month low of 49.4 in November from 51.3 in October, reflecting weak external demand from developed countries. "China's growth momentum softened a little in November," said Hongbin Qu, chief China economist at HSBC in a comment accompanying the PMI. In the October 29-30 Fed policy meeting minutes released on Wednesday, officials indicated that they could decide to start scaling back the asset purchases at one of their next few meetings provided this was warranted by economic growth. "The headline that most participants saw tapering in the next couple of meetings cannot be much of surprise, since the alternative is a virtual indefinite postponement," said Steven Englander, global head of G10 FX strategy at CitiFX. "That said, the 5 percent probability associated with a December tapering seemed too low so there may have been an unwinding of somewhat overly dovish expectations," Englander wrote in a note to clients. The dollar index, which tracks the greenback against a basket of major currencies, rose 0.1 percent to 81.183 .DXY after it climbed 0.4 percent on Wednesday, marking its biggest one-day gain in about two weeks. The dollar added about 0.4 percent against its Japanese counterpart, buying 100.41 yen. The euro gave up about 0.2 percent to $1.3416. It was also buying 134.70 yen, recovering 0.2 percent on the day but still well off a four-year high of 135.94 yen touched on Wednesday. The single currency plunged on Wednesday after a Bloomberg report said the ECB was considering cutting its deposit rate, one of its two key interest rates, to below zero. An ECB spokesperson declined to comment on the report. The Bank of Japan maintained its ultra-loose monetary policy at the end of its two-day meeting on Thursday as widely expected, and reiterated the economy is moderately recovering. In commodities trading, brent crude oil gave up earlier gains and slipped 0.3 percent to $107.69. It surged by more than $1 a barrel in the previous session after a U.S. official said it would be "very hard" to get a nuclear agreement with Iran this week. U.S. oil futures for January delivery shed about 0.3 percent to $93.58, after reversing gains on Wednesday following release of the Fed minutes. Three-month copper on the London Metal Exchange fell by about 0.6 percent to $6,955 a tonne, pressured by the tapering concerns and the softer China manufacturing. Spot gold edged up to $1,247.26 but was still trading near four-month lows after its biggest drop in seven weeks in the previous session. Source : reuters
