Asia stocks extend losses after China PMI data; Nikkei tumbles 1.6%

Investing.com - Asian stock markets were broadly lower during late Asian trade on Thursday, extending losses following the release of data showing manufacturing activity in China contracted for the 11th consecutive month in September.

During late Asian trade, Hong Kong's Hang Seng Index dropped 1%, Australia’s ASX/200 Index ended down 0.5%, while Japan’s Nikkei 225 Index tumbled 1.6%.

Midway through the session, data showed that China’s HSBC Flash Purchasing Managers Index, the earliest indicator of the country's industrial activity, rose slightly to 47.8 in September from a final reading of 47.6 in August.

Despite the modest uptick higher, manufacturing activity in China remained in contraction territory for the 11th consecutive month, adding to fears over a deeper-than-expected slowdown in the region’s largest economy.

A deeper slowdown in China, the world’s second biggest economy, would impair a global expansion that is already faltering because of the euro zone’s ongoing debt crisis.

Sentiment also remained vulnerable amid ongoing reports Spanish Prime Minister Mariano Rajoy is uncertain about asking for help from the European Central Bank's new bond-purchasing program, which would mean signing up to a permanent bailout fund.

Markets were eyeing an auction of 10-year Spanish government bonds later in the day, as it was expected to be an important test of investor appetite for the country’s debt.

In Tokyo, the Nikkei pulled back from the previous session’s four-month closing high, as market players said the effects of the Bank of Japan’s monetary policy easing from the previous day were likely to be short-lived.

The yen regained strength against the U.S. dollar during late Asian trade Thursday, dampening the outlook for export earnings for the country’s top exporters.
 
A strong currency undermines the value of Japanese exporters' overseas profits, and also makes Japanese shares less attractive to investors holding other currencies.

Shares in automakers Toyota and Honda slumped 1.4% and 1.9% respectively, while consumer electronic makers Canon and Sony tumbled 3.15% and 4.55% apiece.

Energy producers were sharply lower, after crude oil prices fell to a six-week low in New York. Inpex shares declined 3.5%, while JX Holdings retreated 2%.
    
Elsewhere, in Hong Kong, the benchmark Hang Seng index was pulled down by Hong Kong-listed firms linked to China’s economic health.

Property developers Sun Hung Kai Properties dropped 1.8%, Sino Land fell 1.95%, while mainland developer Agile Property Holdings declined 1.45%.

Oil-linked firms traded sharply lower, with CNOOC shares tumbling 3.9% and PetroChina down 1.2%.

Meanwhile, shares in Australia were dragged lower by losses in miners, which came under pressure amid the uncertain global growth outlook.

Mining heavyweights Rio Tinto and BHP Billiton lost 1.75% and 1.45% respectively, while iron ore producer Fortescue Metals dropped 2.45%.

Looking ahead, the outlook for European stock markets was downbeat, as investors eyed the release of key euro zone manufacturing data later in the day.

The EURO STOXX 50 futures pointed to a loss of 0.65% at the open, France’s CAC 40 futures fell 0.4%, London’s FTSE 100 futures declined 0.45%, while Germany's DAX futures pointed to a loss of 0.45% at the open.

Later in the day, the euro zone was to produce preliminary data on manufacturing and service sector activity, while Germany and France were to release individual reports. In addition, European Central Bank President Mario Draghi was to speak at a conference in Frankfurt.

The U.S. was to release its weekly government report on initial jobless claims, as well as an index of manufacturing activity in Philadelphia.