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Asian markets down on Chinese data

Hong Kong - Asian shares were broadly lower on Monday as Chinese manufacturing activity slipped, Japanese business confidence fell, and worries persisted over debt-ridden Spain.

In Tokyo the benchmark Nikkei 225 index was down 1.14%, Taiwan was off 0.68% and Singapore slipped 0.43%.

Hong Kong, Shanghai, Seoul and Sydney were all closed for public holidays.

The falls came after official data showed manufacturing activity in China, the world's second-biggest economy, contracted for a second straight month in September.

The government's purchasing managers' index (PMI) stood at 49.8, falling short of expectations. A PMI reading above 50 indicates expansion, while one below points to contraction.

It came after British bank HSBC at the weekend released its own PMI of 47.9, its 11th consecutive month of contraction.

China's economic growth slowed to 7.6% in the three months to June, the poorest result since the height of the global financial crisis three years ago.

Beijing has expressed confidence it will achieve its 2012 economic growth target of 7.5%, though that would mark a sharp slowdown from 9.3% last year and 2010's 10.4%.

Lee Kok Joo, head of research at Phillip Securities in Singapore, told Dow Jones Newswires: "The macro picture is still in contraction mode. Investors are still very cautious of going into the market,"

In Tokyo, the Bank of Japan said confidence among large manufacturers worsened in the quarter ended September, with businesses suffering from a territorial spat with China over disputed islands in the East China Sea.

Auto giants Toyota and Nissan said last week they would cut production in China, Japan's largest trading partner, because demand for Japanese cars has dropped.

Europe's debt crisis was also in investors' minds, with Spain's economic descent accelerating in recent days amid increasing anti-austerity protests, and Madrid now appearing increasingly likely to apply for a sovereign bailout.

Madrid has unveiled swingeing cuts of €39bn in government spending, including a third straight year of salary freezes for civil servants, reducing its deficit from 8.9% of GDP last year to 2.8% in 2014.

But it is projecting debt to reach 85.3% of GDP in 2012 and 90.5% in 2013.

The single currency was changing hands at $1.2819 and ¥99.84, down from $1.2856 and ¥100.12 in New York late on Friday, while the dollar was flat at ¥77.88.

On oil markets New York's main contract, light sweet crude for delivery in November, shed 56 cents to $91.63 a barrel and Brent North Sea crude for November retreated 43 cents to $111.96.

Gold was at $1 765.00 at 04:00 GMT compared with $1 778.10 on Friday.


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