[HONG KONG] Shanghai and Hong Kong stocks fell Monday after a gauge of Chinese factory activity hit a more than three-year low in January, but most other Asian markets remained buoyed by Japan's decision last week to slash interest rates to negative.
In another example of weakness in China's economy, the official Purchasing Managers Index (PMI) showed the country's key manufacturing sector shrank for the sixth straight month and was now at its weakest since August 2012.
The news follows a string of data indicating that the once-mighty growth rates in the Asian giant are well in the past.
"The manufacturing sector will likely face a tough year ahead on the back of overcapacity, weakening global demand, and the government's plans to tackle pollution," ANZ economists Liu Ligang and Louis Lam said in a report.
Worries about the slowdown in the world's second biggest economy - and its leaders handling of it - were among the key reasons for a rout across global markets in January that wiped trillions of dollars off valuations.
"Headwinds on traditional manufacturers are clearly increasing rather than fading," Chen Xingdong, chief China economist at BNP Paribas SA in Beijing, told Bloomberg News. "The economy is still weakening."
In early trade Shanghai stocks were down 0.4 per cent and Hong Kong lost 0.1 per cent.
However, Tokyo led most other equities markets higher as the euphoria continued after Friday's shock announcement from the Bank of Japan that it would effectively start charging lenders to park their cash with it.
The move - intended to ramp up lending to people and businesses in order to kickstart the economy and fend off deflation - spurred a rally across world markets and sent the yen tumbling.
The Nikkei index was up 1.8 per cent by lunch while Sydney gained more than one percent and Seoul added 0.2 per cent. There were also gains in Wellington, Taipei and Singapore.
The announcement came as central banks from Asia to the Americas look to support world markets after they took a beating last month. Last month the European Central Bank indicated it was ready to ease monetary policy further in March, while the Federal Reserve held off another interest rate hike last week.
Data showing growth in the US economy slowed sharply in October-December and further reduced the chances the Fed will hike rates anytime soon.
On oil markets US benchmark West Texas Intermediate fell two per cent and Brent lost 1.9 per cent after enjoying a four-day rally at the end of last week, fanned by hopes of talks between the Opec producers' club and Russia on cutting output.
The black gold picked up recently after sinking to more than 12-year lows owing to a perfect storm of overproduction, weak demand, a slowing global economy and a strong dollar.
"Oil has stopped its bullish momentum and most of the reason comes from the relatively strong dollar on light of Japan's surprising negative interest rate decision," said Phillip Futures analyst Daniel Ang.