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 The BOJ's moves to lift growth and inflation bolstered expectations
the European Central Bank, which meets on Thursday, would eventually
resort to large-scale purchases of government bond, driving
benchmark euro zone yields lower <GVD/EUR>.
However, data showing factories across the euro zone and Asia
generally lost momentum last month tempered investors' mood,
weighing on global stocks.
China's services sector grew at its slowest pace in nine months, the
National Bureau of Statistics said, as a cooling property sector
weighed on demand.
Another official purchasing managers' index survey on Saturday
showed factory activity in the world's second-largest economy
unexpectedly fell to a five-month low in October as firms faced
slowing orders and rising borrowing costs.
"The optimism created by the Bank of Japan by increasing their
purchase of quantitative assets has been hit by the Chinese
manufacturing data released today, which fell well short of
expectations," Naeem Aslam, chief market analyst at Ava Trade, said.
Final euro zone manufacturing PMI data for October showed activity
picking up compared with September, though the final figure was
lower than an earlier flash estimate.
German manufacturing returned to modest growth but French factory
activity contracted faster than in September.
The U.S. ISM survey due later on Monday is forecast to show
manufacturing maintained a healthy expansion in October.
European shares fell, unwinding some of last week's sharp gains. The
pan-European FTSEurofirst 300 index was down 0.4 percent at 1200
GMT.
MSCI's broadest index of Asia-Pacific shares outside Japan
fell 0.6 percent, off a five-week high hit after the BOJ on Friday
expanded its huge stimulus spending in a stark admission that growth
and inflation had not picked up as expected after a sales tax hike
in April.
Tokyo stocks, which rose more than 4 percent on Friday, were closed
on Monday for a holiday.
Wall Street looked set to open flat to lower, according to stock
index futures. Both the Dow Jones Industrial average and the S&P 500
saw record closing highs on Friday.
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STRONG DOLLAR
The dollar surged past 113 yen for the first time since December
2007 and was last up 1.25 percent at 113.67 yen.
"The question is how high can we go," said Valentin Marinov, head of
European G10 currency strategy at Citi in London.
"The move on Friday was dominated by a yen sell-off across the
board, but … any move higher from here in the near-tern would depend
on further dollar outperformance."
The euro hit a low of $1.2439, its weakest in more than two years.
It was last down 0.2 percent at $1.2496.
These moves helped push the dollar to highs not seen since mid-2010
versus a basket of currencies.
The strong dollar and the Chinese data helped push Brent crude
prices lower, though it later recovered to just above $86 a barrel.
Gold held close to four-year lows, also due to the strength of the
U.S. currency. It last traded at $1,173.00 an ounce.
The Chinese numbers supported safe-haven German government bonds.
Ten-year German yields fell a basis point to 0.842 percent.
(Additional reporting by Wayne Coe in Sydney, Blaise Robinson in
Paris, Jehn Geddie and Jemima Kelly in London; Editing by Hugh
Lawson)
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