Asian stocks fall as China slowdown bites

Asian stock markets fell today, dragged down by reports of a manufacturing slowdown in China and a deepening economic malaise in Europe.

Japan’s Nikkei 225 index dropped 1% to 10,027.72 as the country’s formidable export sector faded amid fears of slowing overseas demand.

Hong Kong’s Hang Seng lost 0.9% to 20,712.70 and South Korea’s Kospi shed 0.3% to 2,019.79.

Australia’s S&P/ASX 200 slipped 0.2% to 4,264.50 as the country’s mining and resource shares took a pounding over worries of reduced demand from China, the world’s biggest consumer of raw materials.

BHP Billiton, the world’s largest mining company, lost 1.3% in Sydney. Steel makers also took a hit. South Korea’s Posco lost 0.9% while Japan’s JFE Holdings dropped 2.2%.

Yesterday, data showed China’s manufacturing is contracting. An index compiled by HSBC fell to 48.1 in March from 49.6 in February. Figures below 50 indicate that manufacturing is shrinking.

That is a negative sign because growth in China has played a key role in shoring up the global economy since the financial crisis of 2008.

And in another sign of cooling growth in the world’s second largest economy, new home prices dropped in 45 Chinese cities in February as the government implemented measures to cool property speculation.

Worries about China’s deceleration were compounded by a survey showing slower growth in Europe.

An index of economic activity from financial information company Markit fell to 48.8 in March from 49.3 a month earlier. The index combines both the services and manufacturing.

Japanese exporters whose fortunes are closely linked with European demand came under pressure. Honda lost 2.3% and Mazda shed 2.1%. Sharp slid 2.9% and Sony lost 2.6%.