IP:Strong business data from eurozone boosts investors
Investors looked to euro zone data to lift their spirits on Thursday after surprisingly soft Chinese manufacturing figures hit commodity-linked currencies and other growth-sensitive assets in Asia.
Euro zone-wide purchasing manager data, led by another impressive performance by Germany, supported the recent hopes that the bloc is finally putting the worst of its debt crisis worries behind it.
European shares were virtually unchanged near 5-1/2 year highs in early deals, with the better than expected PMI data offset by China's first drop in factory activity in six months.
China's flash Markit/HSBC Purchasing Managers' Index (PMI) fell to 49.6 in January, from December's 50.5, suggesting a mild slowdown at the end of 2013 has continued into the new year.
"The weak flash PMI will inevitably inflame China slowdown worries, but this is only one data point," said Linus Yip, a strategist with First Shanghai Securities in Hong Kong.
"If more data start to also show a deeper slowdown, Beijing may be forced to stimulate in order to maintain a stable basis for growth that they need to execute reforms.
Shanghai shares slipped 0.5 percent finance/markets/index?symbol=cn%21SHI">.SSEC, leading MSCI's all-world index .MIWD00000PUS to its biggest fall in over a week.
In Europe the benchmark FTSEurofirst 300 .FTEU3 dipped 0.1 percent early on despite gains in the euro zone periphery, but then turned marginally positive as stronger data lifted the mood.
Industrial morale data from France came in steady alongside the brighter French and German PMI numbers, teeing investors up nicely for the more comprehensive euro zone-wide figures.
The euro zone composite PMI jumped to 53.2 in January, from 52.1, led mostly by the strength in Germany. The numbers were well above forecast also came alongside a round of unemployment figures.
"We remain highly overweight (on European equities), the only thing is we look for profit taking in due time but it is not the moment," said Didier Duret, Chief Investment Officer at ABN Amro.
The euro, which has dropped almost 2 percent over the last three weeks, bounded up almost a full cent to $1.3620 after the initial flurry of French and German data.
The Swiss franc was also looking more attractive after its government announced plans to force banks to hold more capital.
CRACKED CHINA
The currency worst hit by the weak Chinese data was the Australian dollar, which shed a third of a U.S. cent to $0.8795 as speculators sold it as a liquid proxy for growth in the Asian region.
