* Spreadbetters see lacklustre start to European trade
* China HSBC factory PMI shrinks, misses flash reading
* China official PMI dips below 50 for first time in over 2 years
* U.S. Q4 GDP falls short, pushing down U.S. Treasury yields
* Oil prices give back some of Friday’s surge
By Lisa Twaronite
TOKYO, Feb 2 (Reuters) - Asian shares languished on Monday, after the latest gauge of China’s factory sector activity raised concerns about the world’s second-largest economy.
Financial spreadbetters expected European bourses to follow suit, with Britain’s FTSE 100 seen opening flat to 6 points lower, or down as much as 0.1 percent; Germany’s DAX seen opening 27 to 36 points lower, or down as much as 0.3 percent; and France’s CAC 40 expected to open 1 to 4 points lower, or down as much as 0.1 percent.
“Ahead of the European open we are calling the major bourses mildly weaker,” said Melbourne-based IG Markets strategist Stan Shamu.
“Greek negotiations are likely to remain a dominant theme and, while new Prime Minister Tsipras has said negotiations have been constructive, traders are likely to take this with a grain of salt,” Shamu said in a note to clients.
Greece’s new leftist government began its drive to persuade a sceptical Europe to accept a new debt agreement while it starts to roll back on austerity measures imposed under its existing bailout agreement. It seeks to end the existing arrangement with the European Union, the European Central Bank and International Monetary Fund “troika” when its aid deadline expires on Feb. 28.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down about 0.1 percent, while Japan’s Nikkei stock average dropped 0.7 percent. The Shanghai Composite Index skidded 2.4 percent in the wake of the downbeat China figures.
The final HSBC/Markit Purchasing Managers’ Index (PMI) for January came in at 49.7 on a seasonally adjusted basis, just below the 50.0 level that separates growth from contraction. The figure released on Monday was slightly lower than a preliminary “flash” reading of 49.8.
The official PMI released on Sunday fell to 49.8 in January, a low last seen in September 2012 and below the 50-point level. The unexpected contraction was the first in nearly 2-1/2 years, and firms see more gloom ahead.
The latest batch of disappointing data added to the debate over how and whether Beijing could accelerate policy easing, with most bank economists calling for a combination of rate cuts and increased liquidity.
“The November policy rate cut was preceded by complaints by Premier Li about the lack of credit flow to businesses and we will be looking for similar hints to gauge the likelihood of a bazooka stimulus,” said Tim Condon at ING, adding that he didn’t consider the sub-50 official reading particularly surprising given seasonal factors and wider economic trends.
The Chinese figures came on the heels of the fourth-quarter U.S. gross domestic product report on Friday that showed growth slowed sharply as weak business spending and a wider trade deficit offset a surge in consumer spending.
On Wall Street on Friday, major U.S. stock indexes posted losses for the week and month, driven in part by concern about weak overseas demand. The S&P 500 was down 3.1 percent for January, its biggest monthly slide in a year.
The risk-averse mood initially weighed on the dollar, which dropped to a two-week low of 116.64, as investors preferred the perennial safe-haven appeal of the Japanese currency. But the greenback clawed back early losses and was last up 0.1 percent at 117.61.
The euro also took back some lost ground after touching a one-week low of 130.11, and was last up 0.3 percent at 132.99 yen. Against the dollar, the euro edged up 0.2 percent to $1.1306.
Sagging U.S. Treasury yields also undermined the greenback’s appeal, as investors sought the safety of U.S. fixed-income assets. The benchmark 10-year yield was at 1.667 percent in Asian trading, down from its U.S. close of 1.680 percent on Friday, when it fell as low as 1.646 percent, a level not seen since May 2013.
Oil prices skidded after the weak economic data raised concern about demand, giving back some of Friday’s gains after a record weekly drop in U.S. oil drilling triggered a short-covering rally on the final trading day of the month.
Brent fell 2.1 percent to $51.86 a barrel while and U.S. crude tumbled 2.5 percent to $47.05. (Additional reporting by Pete Sweeney in Shanghai; Editing by Eric Meijer)