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 Copper fell to its lowest level since 2009 after a survey showed
Chinese manufacturing contracted by the most in 15 months in July as
orders shrank. Worries grew over demand in the world's biggest
metals consumer with stockpiles mounting up.
The flash Caixin/Markit China Manufacturing Purchasing Managers'
Index (PMI) contracted for the fifth straight month, and faster than
economists polled by Reuters had estimated.
Euro zone business activity also started the second half on a less
secure footing than expected, hit by Greece's near-bankruptcy.
Markit's flash PMI fell to 53.7 this month from June's four-year
high of 54.2. A Reuters poll had predicted a more modest dip to
54.0.
While economies looked weaker in Europe and Asia,
better-than-expected U.S. jobless claims kept the Federal Reserve on
track for a rate increase in coming months.
The U.S. dollar was 0.4 percent higher against a basket of
currencies, trading at 97.489 <.DXY>. U.S. stock futures <ESc1>
pointed to a slightly higher open on the Wall Street.
"What a conundrum we face: Commodities are shouting that the global
economy is deteriorating, key emerging markets are already seeing
major volatility, and yet the world's most important central bank is
close to tightening monetary policy," Michael Every, head of
financial market research for Asia at Rabobank.
In a busy day for corporate updates on Friday, BASF <BASFn.DE>, the
world's largest chemicals firm by sales, slightly missed
expectations with a 2 percent rise in operating profit, with profits
of French food group Danone <DANO.PA> also falling short of
expectations.
British telecom firm Vodafone rose 3.7 percent after results that
showed improvements across major markets in Germany and Britain.
French defense group Thales was up 8 percent, hitting an
all-time high after its results.
The pan-European FTSEurofirst 300 hit a one-week low early in
the day , but quickly rebounded to trade 0.2 percent higher at
1582.22. Euro zone bond yields fell.
"Historically the ECB (European Central Bank) has said it would do
whatever it takes to save the euro, it has launched quantitative
easing to support the euro zone and investors have faith that they
will continue to be supportive if there are signs of weakness," said
Alastair McCaig, market analyst at IG.
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The Australian dollar, often used as a liquid proxy for China
trades, hit a six-year trough of $0.7269. Slowing Chinese growth
means less demand for commodities such as iron ore, one of
Australia's chief exports. The recent decline in a wide range of
commodities, including oil, has weighed on currencies like the
Canadian and Australian dollars.
London and Shanghai nickel contracts both fell 1.3-1.5
percent.
China looks set to further reduce interest rates and the amount of
cash its banks must hold as reserves to try to keep its economy
growing at 7 percent this year, which would be the slowest pace in a
quarter of a century, a Reuters poll showed on Thursday.
The euro dipped fell 0.3 percent to 1.0944 after the European data,
still well above last week's 3-month low of $1.0808.
Gold slid more than 1 percent to its lowest since early 2010
on Friday, on course for its biggest weekly loss in nine months. [GOL/]
Oil prices neared four-month lows. Brent crude <LCOc1> was down 35
cents at $54.92 a barrel, having hit an intraday low of $54.80, its
lowest since early April. U.S. crude for September delivery <CLc1>
rose 12 cents to $48.57 a barrel. [O/R]
Brent has lost nearly 13 percent in July, its largest one-month fall
since a near 19 percent loss in January.
(Additional reporting by Saikat Chatterjee in Hong Kong, Patrick
Graham and John Geddie in London; Editing by Hugh Lawson)
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