By Lisa Twaronite
TOKYO (Reuters) - Asian shares pared earlier steep
losses on Monday after Chinese markets rallied as investors focused on
some of the bright spots in separate surveys of Chinese factory
activity.
Financial spreadbetters expected a brighter start to
European trading, with Britain's FTSE 100 (.FTSE) seen opening as much
as 0.5 percent higher, Germany's DAX (.GDAXI) 0.4 percent, and France's
CAC 40 (.FCHI) up 0.5 percent.
Persistent fears about Greece's financial situation is
likely to limit gains, and last week's downbeat U.S. data is seen making
investors wary.
MSCI's broadest index of Asia-Pacific shares outside
Japan was nearly flat in late afternoon trading, after early dropping
to its lowest intraday level since April 7.
The CSI300 index of the largest listed companies in
Shanghai and Shenzhen as well as the Shanghai Composite Index (.SSEC)
were both surging more than 4 percent as market participants took stock
of the surveys as well as domestic media commentary asserting the bull
market has not yet ended.
Major state-backed newspapers carried front-page
articles saying despite the tumble on Thursday, when main indexes shed
more than 6 percent, the foundations of the bull market remain
unchanged.
China's official manufacturing Purchasing Managers'
Index (PMI) edged up to 50.2 from April's 50.1, matching the
expectations of economists polled by Reuters, but also suggested Beijing
might have to take additional steps to spur growth.
The final HSBC/Markit PMI was also released and showed a
reading of 49.2 in May, shrinking for a third straight month and below
the 50-point level that separates an expansion from a contraction in
activity on a monthly basis. The private survey showed export orders
contracted at the sharpest rate in nearly two years.
"The PMI figures, both the official one and the HSBC
one, were very close to the consensus view and they can be interpreted
as a further normalization in the economy," Gerry Alfonso, director of
Shenwan Hongyuan Securities Co, wrote in a note.
A separate official survey of China's non-manufacturing
PMI edged down to 53.2, compared to April's 53.4, showing that growth
in the country's services industry cooled last month.
Japanese PMI, meanwhile, showed an improvement. The
Markit/JMMA final Japan Manufacturing PMI rose to a seasonally adjusted
50.9 in May, unchanged from the preliminary reading but higher than a
final 49.9 in April.
Japan's Nikkei stock index (.N225) eked out a tiny gain
to give it a 12th straight gaining session, its longest streak sense
1988.
On Wall Street on Friday, major U.S. indexes posted
monthly gains but daily losses after the University of Michigan's
consumer sentiment marked a drop, while the Institute for Supply
Management-Chicago Business Barometer unexpectedly fell.
The U.S. government also revised its first-quarter
gross domestic product estimate to show GDP contracted at a 0.7 percent
annual rate instead of the 0.2 percent growth pace it estimated last
month.
That was slightly better than economists' expectations
for a drop of 0.8 percent, but still underscored the fact that the
recovery stalled early this year, and the Federal Reserve policymakers
might wait longer to raise U.S. interest rates until they have more
confidence in the economy's momentum.
The figures weighed on U.S. Treasury yields, curbing
the greenback's recent rally against the yen. It stood at 124.20 (JPY=)
in early trading, nearly flat on the day and below its more than 12-year
peak of 124.46 yen scaled last week.
Greece's woes weighed on the euro, which slipped about
0.4 percent to $1.0951 (EUR=). That helped an index tracking the dollar
against a basket of currencies gain about 0.2 percent to 97.114 (.DXY).
Greece and its European creditors agreed on the need to
reach a cash-for-reforms deal quickly as Athens missed a self-imposed
Sunday deadline for reaching an agreement to unlock aid, sources close
to the talks said.
"It's difficult to quantify how much the currency
market has factored in the possibility of Greece missing the June 5
repayment deadline," said Shinichiro Kadota, chief Japan forex
strategist at Barclays in Tokyo.
"Greek debt yields provide only a rough guide, and
although a missed deadline will not spell default, market concern
remains high," he said.
In commodities trading, crude oil surged nearly 5
percent on Friday but started the week on a subdued note, as rising OPEC
output and an expectation that the group would keep production high
added to sentiment that the market remained over supplied despite
ongoing falls in U.S. rig operations.
U.S. crude futures (CLc1) fell about 0.8 percent to $59.85 per barrel, while Brent (LCOc1) shed about 0.5 percent to $65.26.
(Additional reporting by Smauel Shen and Pete Sweeney in Shanghai and Shinichi Saoshiro in Tokyo; Editing by Shri Navaratnam)
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