Asian shares slip on weak China manufacturing data

HONG KONG (AFP) - Asian markets fell on Monday as another weak manufacturing report out of China added to concerns about the strength of the world's number two economy.

The disappointing figures and a negative lead from Wall Street offset a survey showing business confidence in Japan at its highest level for more than two years.

Tokyo slipped 0.10 percent as profit-takers moved in following a healthy rally on Friday and despite the yen falling against the dollar.

Shanghai was 0.67 percent lower owing to the weak manufacturing numbers, while Sydney's index, which includes several firms that rely on Chinese business, lost 1.34 percent. Seoul fell 0.34 percent.

Hong Kong and Bangkok were closed for public holidays.

Beijing's official purchasing managers index (PMI), a closely watched gauge of manufacturing activity, came in at 50.1 in June, in line with expectations but down from 50.8 in May. Anything above 50 points to growth and anything below indicates contraction.

HSBC also said its own PMI came in at 48.2, down from May's final reading of 49.2 and its lowest since September.

The figures are the latest sign that the Asian powerhouse is losing strength, which could have implications for other economies that rely it if for their own growth.

They also come after fears of a cash crunch in China's financial system sent global markets into a tailspin, before the country's central bank said it would provide any necessary support.

In Tokyo the quarterly tankan survey of business confidence recorded a reading of "plus four", its highest level since March 2011 and the first time it has been positive since September of that year.

The figure, the first reading since Prime Minister Shinzo Aba launched a huge stimulus programme in April to lift the economy, compares with a reading of "minus eight" in the previous quarter.

The survey represents the percentage of firms saying business conditions are good minus those saying they are bad.

In currency trading, the yen slipped against the dollar, continuing a trend from last week after the US Federal Reserve moved to temper fears that it would reel in its bond-buying scheme too early.

The dollar bought 99.28 yen in early Asian trade, against 99.11 yen in New York late Friday. The euro was at to $1.3017 compared with $1.3013 late Friday while it was also at 129.29 yen, from 128.99 yen.

On Wall Street the Dow fell 0.76 percent, while the S&P 500 lost 0.43 percent owing to profit-taking after a three-day rally. But the Nasdaq ended flat.

Oil prices fell. New York's main contract, West Texas Intermediate light sweet crude for August, fell 42 cents to $96.14 a barrel while Brent North Sea crude for August shed 50 cents to $101.66.

Gold rose to $1,233.30 per ounce by 0210 GMT, compared with $1,203.50 late Friday.