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Asian shares lower after weak China data

Markets across Asia fell on Thursday as investors were spooked by data showing Chinese manufacturing activity shrank in January for the first time in six months.

HONG KONG - Markets across Asia fell on Thursday as investors were spooked by data showing Chinese manufacturing activity shrank in January for the first time in six months.

Regional markets were also given a soft lead from Wall Street, which ended mixed as a below-par corporate earnings season continued.

Tokyo fell 0.79 percent or 125.07 points to close at 15,695.89, giving up earlier gains as the downbeat sentiment send traders into the yen and away from the dollar and euro.

Sydney fell 1.07 percent or 56.8 points to 5,263.0 while Seoul lost 1.16 percent or 22.83 points to close at 1,947.59 on news that South Korean economic growth slowed in the October-December quarter.

Shanghai slipped 0.47 percent or 9.57 points to 2,042.18 and and Hong Kong shed 1.5 percent to 22,733.9 points, its lowest close since January 7.

Banking giant HSBC said on Thursday that preliminary results showed manufacturing activity in China contracted sharply, adding to recent concern about the world's number two economy.

The bank's early reading on its purchasing managers' index for this month came in at 49.6, well down from 50.5 in December and its lowest since July. A reading above 50 indicates growth, while anything below signals contraction.

"The PMI figure certainly had an impact on the market, showing there still hasn't been any improvement in the domestic economy," Zheshang Securities analyst Zhang Yanbing told AFP.

Most of the bank's sub-indices were also lower, including key new export orders, the survey found.

HSBC economist Qu Hongbin said in a statement that the shrinkage was mostly because of cooling domestic demand and added that "as inflation is not a concern, the policy focus should tilt toward supporting growth" to avoid another economic slowdown as seen in the last quarter of 2013.

Official figures at the start of the week showed the Chinese economy grew 7.7 percent last year -- the same as 2012, which was the slowest since 1999. It also showed that expansion in the October-December quarter came in at 7.7 percent, weaker than the 7.8 percent in the previous three months.

Shares in Shanghai were given some support by news that China's central bank had pumped almost US$20 billion into the financial system on Thursday to ease a liquidity squeeze before the Chinese New Year holiday.

It made a similar move on Tuesday, which came a day after the bank said it had provided short-term liquidity to some big commercial lenders to head off a possible credit crunch.

In forex trade, the greenback bought 104.39 yen in Tokyo, down from 104.54 yen in New York on Wednesday, while the euro fetched 141.39 yen against 141.57 yen in New York.

The euro was also at US$1.3545, against US$1.3544 in New York.

US shares ended mixed as earnings season failed to inspire. Before releasing their fourth-quarter reports, a large number of companies warned of poor earnings, according to a report by S&P Capital IQ.

Of the 100 firms to give an outlook, 80 were negative, 10 were positive and 10 were in line, said the report. The ratio of negative-to-higher forecasts is higher than the 15-year average, S&P Capital IQ said.

Computer giant IBM sank 3.3 percent after posting disappointing sales in its hardware division during the fourth quarter.

The Dow fell 0.25 percent, but the S&P 500 edged up 0.06 percent and the Nasdaq added 0.41 percent.

Oil prices slipped as investors locked in profits after prices struck their highest levels this year on forecasts of stronger crude demand.

New York's main contract, West Texas Intermediate for March delivery, was down 21 cents at US$96.52 a barrel after rising US$1.76 in US trade. Brent crude for March dipped 21 cents to US$108.06 following a US$1.54 jump late Wednesday.

Gold fetched US$1,235.80 at 0700 GMT compared with US$1,239.88 late Wednesday.

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