Weak China data dims Asia stocks while Europe rises as investors look to upcoming Fed meeting

BEIJING, China – Asian stocks were mixed and Europe rose Monday after China reported weak factory output while investors looked ahead to this week’s U.S. Federal Reserve decision on interest rates.

KEEPING SCORE: In early trading, France’s CAC-40 gained 0.6 per cent to 4,578.49 and Germany’s DAX advanced 0.6 per cent to 10,184.42. Britain’s FTSE 100 rose 0.6 per cent to 6,154.44. Wall Street was set to gain. Dow futures were up 0.1 per cent to 16,347.00 and S&P 500 futures gained 0.2 per cent to 1,953.40.

CHINESE MANUFACTURING: Factory output in August grew by a disappointing 6.1 per cent, prompting expectations of new stimulus for the cooling economy. Analysts said even the level reported was due to comparison with an unusually weak period a year earlier. That came after August exports fell 5.5 per cent. The latest data “do cast doubts over the underlying strength of industrial activity,” said UBS in a report.

US RATES: Traders were focused on Thursday’s Federal Reserve meeting, which may raise interest rates for the first time since 2008 or hold off but signal intent to tighten access to credit. Some analysts suggest China’s economic weakening and uncertainty about U.S. inflation might prompt the Fed to postpone action. But the Fed deputy chairman, Stanley Fisher, said two weeks ago he still saw a “pretty strong case” for raising rates.

ANALYST COMMENT: “Trader thinking this week will be dominated by Thursday morning’s Fed decision. Although we are now only four days out from the decision, there is little sign of a market consensus developing, either on what the Fed will do or on how markets will react if they do lift rates,” said Ric Spooner of CMC Markets in a report. “Any unexpected results on this week’s release of U.S. retail sales, industrial production or CPI data could influence thinking on the Fed decision and roil markets.”

ASIA’S DAY: The Shanghai Composite Index fell 2.7 per cent to 3,114.80 and Tokyo’s Nikkei 225 lost 1.6 per cent to 17,965.70. Hong Kong’s Hang Seng added 0.3 per cent to 21,561.90 and Australia’s S&P/ASX 200 advanced 0.5 per cent to 5,096.50. South Korea’s Kospi lost 0.5 per cent to 1,931.46. Singapore and Bangkok also declined. India’s Sensex added 0.6 per cent to 25.771.06.

ENERGY: Benchmark U.S. crude fell 26 cents to $44.37 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.29 on Friday to close at $44.63. Brent crude, used to price international oils, declined 64 cents to $49.25 in London. It lost 84 cents in the previous session to close at $49.89.

CURRENCIES: The dollar weakened to 120.17 yen from Friday’s 120.58 yen. The euro edged up to $1.1340 from the previous session’s $1.1335.