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World stocks extended losses on Thursday as evidence suggested both the Chinese and European economies were slowing, while the yen slid to multi-year lows against the dollar and euro.
The China flash HSBC/Markit manufacturing purchasing managers' index showed factory output contracted in the world's second-biggest economy for the first time in six months..
In Europe signs were just as gloomy as the private sector in its biggest economy, Germany, grew at the slowest rate in 16 months, and in France a slight pick-up was overshadowed by the fastest drop in new business in over a year.
"There has been a little bit of relief in markets recently, but I think this will create another round of fears that the euro zone is losing momentum," said Emile Cardon, a euro zone strategist at Rabobank.
China's data had left Asian stocks excluding Japan's high-flying Nikkei at a month low, and Europe's dour figures saw its main stock markets in London, Frankfurt and Paris tumble 0.4, 0.6 and 0.8%.
With the data also raising the pressure on the European Central Bank as it ponders possible asset-buying schemes, euro zone government bond yields kicked lower and the euro fell for the first time in three days.
"I think this increases the chances that the ECB will actually start buying government bonds," added Rabobank's Cardon.
Markets were also still digesting Wednesday's meeting minutes from the US central bank which suggested that it will still push ahead with its first post-financial crisis rate hike next year.
The minutes said a number of Federal Reserve officials felt it would be wise to provide some clarity soon on how swiftly rates might rise. In addition, in discussing a long-term strategy statement officials plan to issue in January, the minutes said there was widespread agreement that inflation both above and below the central bank's 2% target was equally costly.
IRON WILL
The Fed's hints of confidence about the economy further highlighted the divergence in US monetary policy relative to Europe and Japan. The ECB and Bank of Japan are struggling to stave off deflation and shore up their shaky economies.
Beaten down by the dollar again, the yen also slid against the euro. After the weak euro zone data, the bloc's currency remained near a six-year peak of 148.94 yen. It fetched $1.2511, off an overnight three-week high of $1.2602.
In commodities, gold remained under pressure. It fell more than 1% on Wednesday after a poll showed weaker support among Swiss voters for a referendum that would require the Swiss National Bank (SNB) to boost its gold reserves.
If the "Save our Swiss gold" proposal is approved, the SNB would be banned from selling any of its gold reserves and would have to hold at least 20% of its assets in the metal, compared with 7.8% last month.
China's data had landed another blow on the Australian dollar as the price of iron ore, one of its big exports to China, hit a five-year low.
Copper dropped 0.2% though Brent oil managed to steady just above $78 a barrel as the market waited for news on possible cuts in oil output ahead of what is shaping up to be a landmark OPEC meeting next week.
"The market has fallen to a level it is going to park at until it gets anything more definitive about OPEC," said Ric Spooner, chief market analyst at Sydney's CMC Markets.
