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updated: 9/20/2012 7:15 AM

World stocks fall on weak Japan, China indicators

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Associated Press

BANGKOK -- World stock markets turned lower Thursday after weak Japanese trade figures and a contraction in Chinese manufacturing underlined that the global economy continues to struggle.

The Japanese data showed that the country's powerhouse export sector was continuing to suffer the effects of a slowdown in Europe and elsewhere. Exports in August totaled 5.05 trillion yen ($64.33 billion), down 5.8 percent from a year earlier. Imports were also down. Exports to Europe sank 28 percent.

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The economic news from China wasn't any better. A private survey of manufacturers showed that activity fell again in September, though at a slightly slower pace than July.

European stocks fell in early trading. Britain's FTSE 100 shed 0.7 percent to 5,849.66. Germany's DAX slipped 0.3 percent to 7,370.29 and France's CAC-40 lost 0.4 percent to 3,518.15.

Wall Street futures also fell. Dow Jones industrial futures lost 0.3 percent to 13,462 while S&P 500 futures slid 0.3 percent to 1,448.80.

The losses in Asia were more acute. Japan's Nikkei 225 index dropped 1.6 percent to close at 9,086.98. South Korea's Kospi shed 0.9 percent to 1,990.33 and Hong Kong's Hang Seng lost 1.2 percent to 20,590.92. Benchmarks in Singapore, Taiwan and Indonesia also fell. New Zealand's bucked the trend and rose.

In mainland China, the Shanghai Composite Index tumbled 2.1 percent to 2,024.84, the lowest closing in more than three years. The Shenzhen Composite Index lost almost 3 percent to 840.21.

Asian stocks had rallied a day before, after the Bank of Japan announced an aggressive monetary easing program in an attempt to spur growth and counter the strength of the Japanese yen.

But the market impact of the Bank of Japan's move was short-lived, a possible sign that investors are getting stimulus-weary. The move came days after the U.S. Federal Reserve revealed it will purchase an average of $40 billion of mortgage-backed securities a month until the economy shows significant improvement.

Andrew Sullivan, principal sales trader at Piper Jaffray in Hong Kong, said in an email that it was "disappointing that the initial rally on the BOJ stimulus did not hold."

Markets also didn't get much encouragement from the release of preliminary manufacturing data out of China for September. The HSBC Flash Purchasing Managers' Index stood at 47.8 for the month out of a 100-point scale on which numbers below 50 indicate contraction.

Still, the figure was an improvement over August's 47.6 level, suggesting that the slowdown may be stabilizing.

"It showed the decline has slowed down," said Francis Lun, managing director of Lyncean Holdings in Hong Kong. "The problem is with Europe and America. Except for the iPhone, nothing is selling."

Japanese export stocks took a beating, as the yen bounced back from a brief drop sparked by the central bank's announcement Wednesday. Mazda Motor Corp. plummeted 4.8 percent and Yamaha Motor Co. lost 3.8 percent. Sony Corp. shed 4.6 percent.

Australian surf wear retailer Billabong International plunged 7.3 percent after saying that a private equity firm that had been looking to make a takeover bid for company had pulled out.

Benchmark oil for October delivery was down 54 cents to $91.44 in electronic trading on the New York Mercantile Exchange. The contract for crude fell $3.31 to finish at $91.98 per barrel on the Nymex on Wednesday.

In currencies, the euro fell to $1.2970 from $1.3063 late Wednesday in New York. The dollar fell to 78.22 yen from 78.39 yen.

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