Shares sag after sub-par China, Japan manufacturing data

World shares weathered soft readings on Chinese and Japanese manufacturing which served to recharge expectations of more policy stimulus there, though lacklustre euro zone data soured the mood on Thursday.

European stock markets initially opened higher, spurred by multi-year highs in Asia, but sluggish euro zone and German purchasing manager data and conflicting numbers from France sent indexes into the red.

Stock index futures suggested US markets would maintain the negative trend.

Overall, euro zone private sector business growth was weaker than forecast, despite help for exporters from a big fall in the euro and the launch in March of a sovereign bond buying programme from the European Central Bank.

"Even though there is a clear improvement on the economic front in Europe ... the jury is still out," BNP Paribas Fortis Global Markets' head of research, Philippe Gijsels, said.

The euro headed lower against the dollar, though it picked up later while European bond markets steadied, with yields on both UK gilts and German Bunds falling after the bonds led a lively sell-off on Wednesday.

The FTSEurofirst 300 equity index fell 0.9 per cent.

Asian stocks distracted investors from worries about Greece, hitting a 15-year peak in Japan, their highest for seven years in China and Taiwan and for nearly four years in South Korea.

MSCI's broadest index of Asia-Pacific shares outside Japan stood slightly higher, having earlier reached levels last seen in early 2008.

The HSBC China manufacturing PMI hit a one-year trough , but that merely added to speculation that central banks in both countries would keep up stimulus.

Japan's Nikkei ended up 0.3 per cent, South Korea gained 1.4 per cent and Shanghai stocks closed up 0.4 per cent, with investors still emboldened by a commentary in state media saying the bull market "has just begun". "Investors only care about the attitude of the government, which has so far appeared tolerant (of the rise in markets)," said Du Changchun, analyst at Northeast Securities in Shanghai.

Dollar Resilient
With US PMIs and another batch of company earnings due later, early futures prices pointed to a subdued start for Wall Street after the previous session's 0.4-0.5 per cent gains for the main US markets.

The dollar was on the rise again and sterling, which had jumped with UK gilt yields on Wednesday after minutes of the Bank of England's last policy meeting, was last down 0.3 per cent at $1.4995.

The New Zealand dollar shed 1.5 per cent to $0.7663 after a central banker said rate cuts could be considered if domestic demand and inflationary pressures were to weaken.

The euro fell as low as $1.0665 before rebounding to $1.0737, up 0.1 per cent on the day. Traders remain sensitive to worries about Greece, but clear signals on that front are unlikely before Monday's Eurogroup meeting.

"The US data this afternoon and durable goods tomorrow may provide some more volatility ahead of the Fed meeting next week," said Piotr Pazio, a strategist with Rabobank in London.

Against the yen, the dollar was firm around 120.06 and on track for its fourth straight session of gains.

Spot gold nudged up to $1,189 an ounce after its sharpest single-session loss since March 6 on Wednesday.