BANGKOK - Asian stock markets were on firmer footing Tuesday as a sign China's manufacturing is beginning to recover provided respite from Europe's deepening debt turmoil.
Global markets slid the day before as Spain's borrowing costs soared, raising the risk that it will require a financial bailout that Europe probably can't afford. Moody's lowering the outlook on Germany's credit rating to negative from stable dented faith in Europe's strongest economy and added to pressure on markets.
Better data on China's manufacturing helped Asian markets find a floor though gains were muted and Japan's benchmark lost ground amid strength in the yen, which hurts its powerhouse exporters.
Preliminary results of HSBC's monthly survey of Chinese manufacturers showed the contraction in manufacturing eased in July. The bank's Purchasing Managers' Index which combines various measures of manufacturing activity rose to 49.5 from 48.2. Readings above 50 denote growth. The individual gauge of factory output showed an expansion in production.
HSBC's chief China economist Hongbin Qu said the survey suggests Beijing's attempts to stimulate the world's second-biggest economy are starting to work. "This calls for more easing efforts to support growth and jobs," he said in a statement. "A more meaningful improvement of growth is expected in the coming months when these measures fully filter through."
Japan's Nikkei 225 stock average was down 0.2 per cent at 8,493.10 while South Korea's Kospi added 0.3 per cent to 1,794.63.
Hong Kong's Hang Seng rose 0.1 per cent to 19,073.25. The market's opening was delayed until early afternoon as a typhoon brought strong winds and heavy rain to the city, shutting down offices and bringing business to a standstill.
Australia's S&P/ASX 200 gained 0.1 per cent to 4,134. China's Shanghai Composite climbed 0.5 per cent to 2,153.08. Benchmarks in Singapore and Thailand also rose.
The tentative gains reflected underlying unease about Europe's prolonged debt crisis.
Analysts at DBS Bank in Singapore said the crisis among the 17 countries that use the euro could be reaching a crunch point as the size of the jump in Spain's two-year borrowing costs was similar to the alarming increase in 2-year U.S. Treasury yields when Lehman Brothers collapsed in September 2008.
Lehman's failure prompted massive intervention by the U.S. government and Federal Reserve to prevent a collapse of the financial system. But European policymakers have been unable to commit to such dramatic steps, partly because of Germany's reluctance to be burdened with the costs of supporting weaker euro nations
"Is this the push that becomes the shove that finally changes the euro landscape once and for all? It could well be," said the DBS report. "Something's gotta give and probably sooner than later."
In the U.S. on Monday the Dow Jones industrial average ended down 101.11 at 12,721.46 after falling 239 points earlier in the day. The Standard & Poor's 500 index fell 12.14 points to 1,350.52. The Nasdaq composite index dropped 35.15 points to 2,890.15.
In energy trading, benchmark crude for September delivery was up 52 cents at $88.66 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell by $3.69, or 4 per cent, to finish Monday at $88.14 per barrel in New York.
The euro rose slightly to $1.212 after hitting a two-year low against the dollar and a near 12-year low versus the yen on Monday. The dollar rose 0.1 per cent to 78.31 yen.