(Updates with US manufacturing PMI flash) * China's manufacturing activity to a low of six and a half years * Growth remains stable in Europe * The manufacturing sector slows in the US * The economic downturn depresses equity markets by Jonathan Koh Gui Qing and Cable LONDON / BEIJING, Aug. 21 (Reuters) - Several indicators suggest that the slowdown in China is growing, the US economy lacks momentum and that the growth should remain weak in Europe have darkened a little over the outlook for the global economy Friday, causing a sharp decline in stock exchanges and commodity prices. According to a survey of purchasing managers, the vast Chinese manufacturing sector contracted in August at a pace not seen in nearly six and a half years, a development that encourages investors to retreat to safe havens such as gold and US Treasury bonds. The markets had already been stung by surprise devaluation of the yuan last week and the collapse of China's stock exchanges at the beginning of the summer. A few minutes from the close in Europe, the continent's main squares yielded between 2% and 3% and Wall Street more than 1.5%. "Uncertainties about Chinese growth are now the main factor by moving the markets," said Tim Condon has, economist at ING. "The data released today fueling doubts about global growth." On Wednesday, the Federal Reserve had already fed the concern by specifically mentioning China as a risk to the economy. Caixin The PMI / Markit "flash" purchasing managers of the Chinese manufacturing sector stood at 47.1 in August, well below the median projection of analysts polled by Reuters (47.7) and down sharply compared to the final July index (47.8). This result, which reflects a contraction in activity, is the worst since March 2009, when the global financial crisis was in full swing. ID: nL5N10U0CT CONTRARY WIND CHINA After three decades of unbridled growth that propelled China as the second largest economy, the activity of the country seems to be over more than what the authorities would do despite the many measures to try to restart. Interest rates have been lowered four times since November and the Chinese currency was devalued by 2% on August 11. Since then, she has lost nearly 3% against the dollar. For some analysts, this decline is not important enough to boost Chinese exports but it is still enough to do therefore fear a "currency war" between countries. The speed at which the Chinese economy seems to lose momentum has led some economists to conclude that Beijing was likely to have difficulty in achieving its stated goal of a 7% increase in gross domestic product (GDP) this year. Data from the United States are hardly appeared more reassuring. The growth of the US manufacturing sector slowed in August to its slowest pace in nearly two years. ID: In nL5N10W24Y first estimate, the Markit purchasing managers (PMI) stood at 52.9 in August, the lowest since October 2013. It was down from the figure of 53 8 calculated in July, while economists polled by Reuters on average had forecast a rise to 54.0. Tim Moore, economist at Markit, "the August survey highlights a lack of momentum of growth and low pressure on prices which could fuel the arguments of the 'doves' when decision-makers (the Federal Reserve note) discuss a possible tightening of monetary policy in September. " The prospect of a future rise in US interest rates fueling market volatility helping to accelerate capital outflows from emerging countries, including China. MIXED SITUATION IN EUROPE In the euro area, according to the first results of PMI surveys in August, the private sector has experienced an unexpected acceleration this month, notably driven by an increase in new orders, suggesting that the program quantitative easing from the European Central Bank (ECB) is beginning to bear fruit. ID: nL5N10W111 But the PMI also showed an acceleration of price declines that may disappoint the Frankfurt institution, including the goal of inflation close to 2% is far removed from the current level (+ 0.2% only July). The composite PMI purchasing managers Markit, considered a good barometer of growth emerged in August to 54.1 in flash version, against 53.9 last month. Economists polled by Reuters had forecast a slight decline to 53.8. According to Rob Dobson, senior economist of Markit, PMI suggests growth of 0.4% in the euro area in the third quarter, a figure consistent with the average of expectations emerged of a Reuters poll released last week. "But we will see slow growth in the euro area in the coming months with the erasing positive effects that could have the low prices and the depreciation of the euro," said Jennifer McKeown, analyst at Capital Economics. She also mentions the risk of an erosion of confidence if the early elections in Greece are synonymous with a new period of uncertainty. ID: nL5N10V3UU ID: nL5N10W1BU (Benoit Van Overstraeten and Myriam Rivet for the French service, edited by Marc Angrand)
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