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 An absence of inflation pressures suggested Asian authorities
could inject more stimulus if needed, while growth in the troubled
currency union weakened just two months after the European Central
Bank launched a 1-trillion-euro stimulus programme.
Meanwhile, the U.S. Federal Reserve has all but put to bed
speculation it would tighten policy in June as the world's biggest
economy barely grew at the start of the year.
"The May (Purchasing Managers' Index) surveys were broadly
disappointing although nothing terribly bad," said Richard Kelly,
head of global strategy at TD Securities.
"There is no question the ECB is going to continue with quantitative
easing up until September 2016. China is just starting the amount of
additional liquidity and stimulus that will be needed to safely
rebalance the economy."
Markit's Composite Flash PMI for the euro zone, based on surveys of
thousands of companies and seen as a good growth indicator, fell to
53.4 from 53.9, missing the 53.8 predicted in a Reuters poll.
 May marks the 23rd month above the 50 level that separates growth
from contraction and Markit said the PMI pointed to 0.4 percent
economic growth in the current quarter, matching the prediction in a
Reuters poll this week. [ECILT/EU]
Demand from abroad for the bloc's goods soared to a 13-month high as
customers took advantage of a weaker euro making the products
cheaper, prompting firms to recruit at the fastest rate in four
years.
However, as in every month since late 2011, service firms cut their
prices again, albeit only slightly. Euro zone prices were flat
year-on-year in April, ending four months of falls, inflation data
showed this week.
World shares hovered near all-time highs on Thursday after downbeat
Chinese data but European markets opened largely subdued after the
disappointing European numbers. [MKTS/GLOB]
The U.S. flash PMI, due later on Thursday, is expected to show a
rise to 54.5 from 54.1, according to a
Reuters poll.
CRACKS IN CHINA
Annabel Fiddes, an economist at Markit, said relatively strong
deflationary pressures in China should leave plenty of scope for
authorities there to implement further stimulus measures.
Beijing has already cut interest rates three times in six months and
economists believe it will have to ease further as economic growth
threatens to slow below the 7-percent pace of the first quarter.
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Chinese activity contracted for a third straight month as domestic
and export orders shrank, adding to views Beijing will have to roll
out its most aggressive stimulus measures since the global financial
crisis to avert a sharper slowdown.
"The subdued flash PMI print suggests there is no clear sign of
near-term stabilisation in (China's) economy. Risks to the outlook
remain to the downside," Barclays economist Shengzu Wang said.
The flash HSBC/Markit PMI fell to 49.1 in May, weaker than an
expected 49.3 and marking the fifth contraction in activity in six
months.
Analysts at Nomura saw China's growth slowing to 6.6 percent
year-on-year in the second quarter, before edging up to 6.8 percent
in the second half of the year.
"To offset the headwinds from deep-seated structural challenges, we
maintain our call of further monetary easing with two more
50-basis-point (bps) cuts to banks' reserve requirement ratio and
two more 25 bp policy interest rates cuts over the rest of this
year," they said.
Japan's economy expanded in January-March at the fastest pace in a
year but much of that growth came from inventories as goods piled up
on factory floors, and private consumption, housing investment and
exports all rose but at a feeble pace.
Still, subdued input and output prices suggested inflation remained
stubbornly low, adding to expectations the Bank of Japan will expand
its already massive monetary stimulus programme later this year.
(Additional reporting by Kevin Yao in BEIJING and Stanley White in
TOKYO; editing by John Stonestreet)
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