An indicator of Chinese manufacturing activity beat forecasts in June but analysts warned that Friday's surprising result belied a slowdown in the world's second-largest economy.

The reading comes as the country loses momentum with policymakers putting the brakes on lending following years of debt-fuelled investment that has raised fears of a financial crisis that could blow out globally.

The purchasing managers' index (PMI), a gauge of factory conditions, came in at 51.7 percent, the National Bureau of Statistics said, beating estimates on a Bloomberg News survey of 51. Anything above 50 is considered growth while a figure below points to contraction.

It was also higher than the previous month's 51.2 and marked the eleventh straight month of expansion -- but ANZ Research warned the acceleration was not broad-based.

It "was mainly due to higher production and the new order sub-indices, which disguised an imbalanced recovery across sectors", ANZ Research said in a note.

"Even with higher-than-expected PMIs in June, the moderation in second-quarter GDP growth is inevitable, in our view."

In the first three months of the year China's economy expanded by a better-than-expected 6.9 percent, but ANZ expects growth to slow to 6.7 percent in April-June.

The slowdown is part of a longer-term trend as China transitions from an investment and export-driven economic model to one more reliant on consumer spending.

But the retooling has been complicated as Beijing wrestles with huge debt and excess capacity left over from massive government-backed infrastructure spending at the height of the global financial crisis.

Asian markets tumble as central banks signal end of low rates
Hong Kong (AFP) June 30, 2017 - Asian markets went into reverse Friday after Wall Street and Europe suffered hefty losses in response to central banks' signals that an end to the era of cheap-money was drawing to a close.

After years of loose monetary policies designed to navigate global economies out of the financial crisis, improving growth and easing unemployment have allowed banks to start flagging tightening measures including interest rate hikes.

While the upbeat outlook is welcomed as a sign of optimism -- Asian markets rallied on Thursday -- there are concerns the world economy can withstand a more stringent borrowing environment.

Wall Street's three main indexes ended deep in the red, while European stocks were also well down.

The selling seeped through to Asia with heavy losses in technology firms continuing while banks were hit by profit-taking.

Tokyo ended the morning 1.1 percent lower, Hong Kong fell one percent, Sydney sank 1.5 percent and Singapore shed 0.9 percent.

Wellington, Taipei and Manila were also well down.

Shanghai gave back 0.3 percent as dealers brushed off data showing a forecast-beating jump in an index of Chinese manufacturing.

The official reading of the purchasing managers index indicated the world's number two economy was stabilising, despite concerns of a growth slowdown.

- 'Game changer' -

"It's the wild swings we are starting to see that worry me the most. Volatility begets volatility and the chances of a very big dip are growing," said Greg McKenna, chief market strategist at AxiTrader.

There is also fading optimism that President Donald Trump will be able to push through promised market-friendly growth programmes as he struggles to garner support for his health care bill despite controlling both houses of Congress.

The shift by central banks out of their easy-money policies -- led by Britain, the European Central Bank and Canada -- has also weighed on the dollar.

For years the greenback has benefited from a divergence between the Federal Reserve's move to higher rates -- including to rate hikes this year -- and other regions. But analysts said the mood is changing.

"A game changer of a week as hawkish central bank commentary steamrolled the markets," said Stephen Innes, senior trader at OANDA.

"Traders are now contemplating who will be next to join the lineup. No one want's to miss out on this party realising there's a co-ordinated policy shift afoot and the chance to catch the removal of an easing bias is far too seductive for traders to ignore."

Talk of tighter ECB rates has pushed the euro to more than one-year highs while the pound has also benefited, despite political uncertainty in Britain. Both currencies were up in Asia.

- Key figures around 0230 GMT -

Tokyo - Nikkei 225: DOWN 1.1 percent at 20,000.88 (break)

Hong Kong - Hang Seng: DOWN 1.0 percent at 25,716.09

Shanghai - Composite: DOWN 0.3 percent at 3,177.44

Euro/dollar: UP at $1.1443 from $1.1441 at 2050 GMT

Dollar/yen: DOWN at 111.91 yen from 112.11 yen

Pound/dollar: UP at $1.3019 from $1.3009

Oil - West Texas Intermediate: UP 21 cents at $45.14 per barrel

Oil - Brent North Sea: UP 19 cents at $47.61

New York - Dow: DOWN 0.8 percent at 21,287.03 (close)

London - FTSE 100: DOWN 0.5 percent at 7,350.32 (close)

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China regulator inspects loans to major firms: Wanda
Beijing (AFP) June 23, 2017
China's banking regulator has ordered an inspection of potentially risky loans to major Chinese companies that have invested heavily overseas, one of the firms under scrutiny said on Friday. Dalian Wanda Group said other domestic companies caught up in the review include AC Milan owner Rossoneri Sport Investment Lux, Club Med's Fosun Group and HNA Group. The China Banking Regulatory Comm ... read more

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