Asia: Stocks tumble as China PMI hits six-year low; gold climbs

[HONG KONG] Asian stocks tumbled, extending the worst week for global equities in nine months, as a gauge of Chinese manufacturing plunged to the lowest since 2009. Gold extended gains.

Benchmark gauges in Hong Kong, Taiwan and Indonesia headed for bear markets, dragging down the MSCI Asia Pacific Index by 1.9 per cent at 11:06 am in Tokyo. Standard & Poor's 500 Index futures dropped 0.4 per cent after the gauge fell the most in 18 months. Gold is set for its biggest weekly advance since January as the selloff in emerging markets spreads. US oil headed for an eighth straight weekly slide, its longest streak since 1986.

"We've been expecting a correction and it looks like we're getting one," said Mark Lister, head of private wealth research at Craigs Investment Partners Ltd in Wellington, which manages about US$7.2 billion. "The S&P had held up, now it's back in negative territory. The whole world's looking a little bit sad. China still looks really worrying on a number of fronts." China's decision to devalue its currency amid slowing growth and the prospect of higher US interest rates has spurred a wave of selling across emerging-markets and commodities. The first read on Chinese economic activity in August added to concern that the slowdown in global growth is deepening, boosting the appeal of haven assets such as gold and sovereign bonds.

The MSCI Asia Pacific Index sank 1.9 per cent, with Japan's Topix index sliding the most since July 8 and the Kospi gauge in Seoul set for its worst week since May 2012. The MSCI All- Country World Index has lost 3.1 per cent this week.

Hong Kong's Hang Seng Index dropped 1.7 per cent, taking declines since an April high beyond 20 per cent. Taiwan's benchmark gauge dropped 1.7 per cent and the Jakarta Composite Index slid 1.6 per cent.

The Korean won weakened 0.6 per cent, its fifth drop in six days. West Texas Intermediate crude fell 1 per cent to US$40.91 a barrel. Copper fell 0.8 per cent and is on its way to a seventh straight weekly loss. Gold climbed a fifth straight day, while Australian bonds advanced.

The S&P 500 slipped out of the 70-point trading range it has been stuck in since March, falling below 2,040 to as low as 2,035.73 on Thursday. It closed below its 200-day moving average for the first time since July 9.

BLOOMBERG