GLOBAL ECONOMY-Global manufacturing growth cools in June

* U.S. manufacturing growth slows to six-month low

* HSBC China PMI falls to 14-month low, new orders drop

* Euro zone PMI falls to 4-month low, UK also slips

* India PMI slips from 2-year peak, S Korea at 6-month low

* Asia growth seen moderating, no sharp downturn
(Adds U.S. ISM data, global data, comment; dateline previously
LONDON/BEIJING)

By Edward Krudy and Ross Finley

NEW YORK/LONDON, July 1 (BestGrowthStock) – Manufacturing growth
cooled around the world in June, with China hitting its slowest
pace in more than a year and growth in the United States and
Europe also easing — further evidence that the global economic
recovery is moderating.

A separate report on Thursday showed big Japanese
manufacturers unexpectedly turned optimistic through mid-June,
but analysts worried that the positive outlook failed to
account for the recent turmoil in the stock market and a rise
in the yen. [ID:nTOE66001C]

Commodity prices fell and stock markets slumped around the
world after the surveys of purchasing managers added to
concerns over the global outlook. In Europe, shares fell to a
five-week closing low, while on Wall Street U.S. shares
suffered losses for a fourth straight session.

Prices of copper and crude oil both fell, hit hard by a
decline in a gauge of China’s manufacturing sector to a level
just slightly above the mark that indicates expansion. China is
the world’s biggest consumer of copper and the second biggest
consumer of energy.

The fall in China’s growth also helped drive Japanese
shares to a seven-month closing low.

But economists played down worries of a precipitous
slowdown in China — which has powered the world economy in its
recovery from recession — and said the risk of a double-dip
recession in industrialized Western economies remained low.

“Fears about hard landing are overplayed,” said Qu Hongbin,
chief economist for China at HSBC, though he noted that
government steps to cool the property market and curb bank
lending appeared also to be effecting manufacturing.

NO HARD LANDING SEEN IN CHINA

HSBC’s China Purchasing Managers’ Index fell to a 14-month
low of 50.4 — just above the 50 mark that divides expansion
from contraction — from 52.7 in May, with both output and new
orders dropping outright for the first time since the depths of
the global downturn in March 2009. [ID:nSGE66004Y]

Yet Qu predicted China would achieve around 9 percent
growth in the second half, underpinned by massive investment
and robust private consumption, after posting annual growth of
11.9 percent in the first quarter.

The Global Manufacturing PMI, produced by JPMorgan with
research and supply management organizations, fell to 55.0 in
June from 57.0 in May.

In the United States, the Institute for Supply Management
said its index of national factory activity fell to 56.2 in
June from 59.7 in May. While employment continued to rise in
all of the major industrial regions covered by the survey, the
pace of the increase slowed in June.

June was the second straight month of slowing U.S. growth
and was the lowest reading since December. New orders and new
export orders, the first components to respond to signs of
economic weakness, both fell, while employment also ticked
lower.

In the euro zone, manufacturing slowed in June to its
weakest growth rate in four months. Spain, already suffering
from weakness, posted its second straight monthly decline in
output growth, offset by still-strong growth in Germany,
Europe’s largest economy. [ID:nLAG006315]

Elsewhere in Asia, manufacturing growth in India eased from
a two-year peak last month, while South Korean factories saw
their pace of growth fall to a six-month low, similar surveys
showed on Thursday. [ID:nLDE65T227] [ID:nSUL000099]

TAPERING OFF

Economists did not sound alarm bells about risks of a hard
landing in Europe or the United States, although it appears
clear that growth has likely peaked and interest rates will
remain on hold into next year.

Looking at the United States, Mark Pawlak, market
strategist at Keefe, Bruyette & Woods in New York, said: “Our
expectations have been that the economy is shifting to a lower
gear. Small businesses are not hiring, and inflation is very
low and is trending lower.”

Mark Miller, international economist at Lloyds TSB
Corporate Markets, warned that “In a lot of Western economies
you’re going to see the pace of economic growth come off in the
second half of the year. That’s the way we’re headed.

“For continental Europe, exports are still a driver of
growth and and I don’t know how much longer that can continue,”
he added.

In Britain, manufacturing output appeared in slightly
better health than the rest of Europe, although it, too, slowed
from a 15-year high clocked in May. Export orders growth
dropped sharply, reflecting continental Europe’s malaise.
[ID:nSLAUHE67T]

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Graphic on Global PMIs

http://link.reuters.com/heq35m
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A flurry of weak U.S. economic data in recent weeks and
persistent worries about the fiscal health of peripheral euro
zone countries have helped drag the MSCI world equity index
(.MIWD00000PUS: ) down more than 10 percent since April.

Underscoring the uneven nature of the global recovery that
is vexing investors, Russian manufacturing expanded in June at
the fastest rate since April 2008. [ID:nSLAUHE67N]

And in Sweden, the Riksbank raised its main policy rate by
25 basis points to 0.50 percent on Thursday, citing a pick-up
in the Swedish economy. It hiked its growth forecast for 2010,
but cut its 2011 and 2012 outlooks. [ID:nLDE6600H3]

Convinced that a sustained recovery from the global
downturn will fuel inflationary pressures, central banks in
Canada, Australia, Norway, India, Malaysia, New Zealand and
Taiwan have already begun to raise interest rates.
(Writing by Edward Krudy, Ross Finley, and Kazunori Takada;
Editing by Mike Peacock and Leslie Adler)

GLOBAL ECONOMY-Global manufacturing growth cools in June