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 The downbeat mood was expected to continue into European trading,
with financial spreadbetters predicting Britain's FTSE 100 to open
24 to 25 points lower, or down as much as 0.4 percent; Germany's DAX
to fall 50 to 51 points, or as much as 0.5 percent; and France's CAC
40 <.FCHI> to drop 20 to 22 points, or as much as 0.5 percent.
"The post-Scottish referendum rally is quickly fading throughout
Europe this morning with major indices looking to open lower
following a flat finish last week in the US and China fears giving
Asian markets a poor start to the week," Jasper Lawler, market
analyst at CMC Markets, said in a note to clients.
China's flash manufacturing PMI reading on Tuesday could come in
below the 50 level, indicating that manufacturing activity is
contracting.
"The psychological effect of a below-50 reading will be significant
and consistent with the slew of softer Chinese data over recent
weeks." Mitul Kotecha, head of FX strategy Asia-Pacific for Barclays
in Singapore, said in a note to clients.
China will not dramatically alter its economic policy because of any
one economic indicator, Finance Minister Lou Jiwei said on Sunday,
in remarks at a meeting of finance ministers and central bank chiefs
from the Group of 20 nations who met in the Australian city of
Cairns. His remarks came days after many economists lowered growth
forecasts having seen the latest set of weak data.
The G20 leaders said they were close to adding an extra $2 trillion
to the global economy and creating millions of new jobs, but
Europe's extended stagnation remained a major stumbling block.
MSCI's broadest index of Asia-Pacific shares outside Japan dropped
about 1 percent. Japan's Nikkei stock average ended down 0.7
percent, after it marked its highest closing level since 2007 on
Friday and gained 2.3 percent last week.
Investors booked gains in heavyweight Softbank <9984.T> after the
listing of Alibaba Group Holding Ltd Softbank, which holds a 32
percent stake in Alibaba, had surged 30 percent over the past six
weeks in anticipation of the Chinese e-commerce company's listing in
the New York Stock Exchange.
Alibaba ended up 38 percent at $93.89 on massive volume on Friday.
Because its stock is traded on the New York Stock Exchange and is
not an S&P 500 component, its gains were not reflected in major
indexes and it did little to help an otherwise lacklustre day on
Wall Street.
The dollar gave up 0.2 percent against a basket of major currencies
to 84.565, after the index posted its 10th consecutive week of gains
on expectations that U.S. interest rates would rise more quickly
than had been expected.
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The Federal Reserve should start raising U.S. interest rates in the
spring, earlier than many investors currently expect, and should do
so both slowly and gradually, Dallas Federal Reserve Bank President
Richard Fisher said in an interview on Fox Business Network on
Friday.
But the outlook for U.S. monetary policy remains murky. The Fed
issued a policy statement at the close of last week's two-day
meeting that suggested the first rate hike wasn't due until around
the middle of next year.
The greenback eased about 0.2 percent against its Japanese
counterpart to 108.87 yen, moving away from a six-year high of
109.46 yen scaled on Friday.
The euro rose 0.3 percent on the day to $1.2864, after drifting down
to touch a fresh 14-month low against the dollar of $1.2826 early on
Monday.
Sterling added about 0.4 percent to $1.6343 after it soared on
Friday following Scotland's vote to reject independence.
Spot gold shed 0.3 percent to $1,212.40. Last week, gold posted a 1
percent drop for its third consecutive weekly fall.
Brent crude dropped 0.5 percent to $97.85 a barrel, while U.S. crude
for October delivery, which expires later on Monday, fell about 0.5
percent to $91.88.
(Editing by Eric Meijer)
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