Markets welcome Chinese slowdown

Global stock markets rose yesterday, viewing a declining Chinese manufacturing purchasing index as the signal of a slowdown rather than the start of a slump.

Manufacturing surveys from other big emerging economies India and Russia served to bolster investor sentiment, with Asia's third-largest economy marking its 16th month of expansion and Russia's activity improving for the seventh month in a row.

In the 16-nation Eurozone, factory activity accelerated, led by Germany and Italy, but it slowed to its weakest in 10 months in France, illustrating how uneven the recovery is.

HSBC's purchasing managers index (PMI) of Chinese companies showed that government steps to slow lending and fight property speculation had been effective, as manufacturing activity shrank for the first time since the depths of the global downturn, in March 2009.

"This is the slowdown that the government wanted – this is no new global crisis," said Roland Randall, strategist at TD Securities.

"Targeted government restrictions and receding fiscal stimulus are to blame."

A similar government survey, published on Sunday, showed a marked dip in growth but no contraction.

Meanwhile, the German retailer, Metro, the world's fourth largest, yesterday said it was more confident about the economic recovery as it reported overall profits in line with forecasts.