Asian shares skid as China data raises growth concerns

TOKYO (Reuters) - Asian shares got off to a downbeat start on Monday, after weekend Chinese data raised concerns about growth in the world's second-largest economy.

China's factory sector unexpectedly shrank for the first time in nearly 2-1/2 years last month and firms see more gloom ahead, according to a survey released on Sunday. The official Purchasing Managers' Index (PMI) fell to 49.8 in January, a low last seen in September 2012 and below the 50-point level that separates growth from contraction on a monthly basis.

The Chinese report came on the heels of the fourth-quarter U.S. gross domestic product report on Friday that showed growth slowed sharply as weak business spending and a wider trade deficit offset a surge in consumer spending.

Also on Sunday, Greece's new leftist government began its drive to persuade a sceptical Europe to accept a new debt agreement while it starts to roll back on austerity measures imposed under its existing bailout agreement. It seeks to end the existing arrangement with the European Union, the European Central Bank and International Monetary Fund "troika" when its aid deadline expires on Feb. 28.

"The combination of softer U.S. data, the disappointing China PMI and the fact that Greece is now very much on a collision course with the rest of Europe over its budget should continue to weigh on risk sentiment in Asia," Westpac Global Strategy Group said in a note to clients.

MSCI's broadest index of Asia-Pacific shares outside Japan was down about 0.1 per cent, while Japan's Nikkei stock average dropped 0.7 per cent in early trade.

On Wall Street on Friday, major U.S. stock indexes posted losses for the week and month, driven in part by concern about weak overseas demand. The S&P 500 was down 3.1 per cent for January, its biggest monthly slide in a year.

The risk-averse mood weighed on the US dollar, which shed about 0.3 per cent to 117.22 yen, not far from a two-week low of 116.64 yen touched on Friday, as investors preferred the perennial safe-haven appeal of the Japanese currency. That also helped push the euro down about 0.1 per cent to 132.45 .

Sagging U.S. Treasury yields also undermined the greenback's appeal, as investors fled to the safety of U.S. fixed-income assets. The benchmark 10-year yield was at 1.652 per cent in Asian trading, down from its U.S. close of 1.68 per cent on Friday, when it fell as low as 1.646 per cent, a level not seen since May 2013.

Oil prices skidded after the downbeat economic data raised concern about demand, giving back some of Friday's after a record weekly drop in U.S. oil drilling triggered a short-covering rally on the final trading day of the month. Brent shed 1.6 per cent to US$52.13 a barrel, while U.S. crude slipped 1.9 per cent to US$47.32.