NEW YORK Global markets got February off to a cautious start on Monday following a rocky January, with stocks and oil falling in the wake of weak manufacturing reports around the world.
U.S. and European stocks fell, after disappointing euro zone manufacturing data dovetailed with the fastest contraction in China's giant factory sector in over three years, and U.S. manufacturing sentiment remained weak.
Those surveys showed the new year began much as the old one ended, with too much capacity chasing too little demand. Economists were expecting a similar picture from the United States.
"My main question is will the U.S. economy be able to continue to grow just through the services sector when the manufacturing sector is having such a tough time?" asked Rabobank U.S.-focused economist Philip Marey.
The Dow Jones industrial average fell 58.9 points, or 0.36 percent, to 16,407.4, the S&P 500 lost 7.6 points, or 0.39 percent, to 1,932.64 and the Nasdaq Composite dropped 10.26 points, or 0.22 percent, to 4,603.69.
Oil prices, the other major factor influencing markets this year, also fell. U.S. crude was down nearly 5 percent to $31.96, resuming a downtrend that had been interrupted of late on hopes for production cuts. Brent dipped as well, falling 3.7 percent to $34.65 a barrel.
Still, Brent was up from Friday and more than 30 percent higher than its 12-year low of almost $27 less than two weeks ago.
It was under pressure Monday as a senior OPEC source told a Saudi Arabian newspaper it was too early to talk about an emergency meeting of the Organization of the Petroleum Exporting Countries (OPEC) to stem the persisting drop in prices amid a world glut.
Crude jumped last week after Russian energy officials said Saudi Arabia had made proposals to manage output and was ready to talk.
Friday's surprise move by Japan to cut interest rates to negative levels continued to provide support for bonds. Japanese government bond yields hit record lows, and bets the European Central Bank will cut its rates again next month also sent German five-year bond yields to all-time lows. [GVD/EUR]
In the United States, however, the bond market was lower, with the 10-year benchmark yield rising to 1.95 percent.
In currency markets, the yen had steady at around 121.20 to the dollar and 131.40 to the euro. Friday's BoJ move set off its biggest one-day fall - roughly 2 percent- in over a year. [FRX/]
Elsewhere, oil-rich Canada's dollar fell half a percent against its U.S. counterpart after the weak economic data dragged oil prices down from overnight highs as lofty as $36 a barrel. Fellow oil exporter Norway's currency slipped 0.3 percent versus the euro.
MSCI's 46-country All World share index, which lost over 6 percent last month in its worst start to a year since the height of the global financial crisis in 2008, was in the red, slipping 0.1 percent.
Chinese stocks slipped more than 1 percent after the weak data strengthened calls for more stimulus.
(Additional reporting by Marius Zaharia, Karolin Schaps and Jemima Kelly; Editing by Bernadette Baum)
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