GLOBAL MARKETS: European Stocks Expected To Open Lower; Asia Weighs

European stock markets are expected to open lower Thursday amid concerns about Asian economies after grim data from China and Japan, and persistent fears that the European debt crisis is worsening after Italy's poor bond auction on Wednesday. Sentiment was soured overnight in Asia by a weak business sentiment report in Japan and a contraction in China's manufacturing activity. At 0715 GMT, Japan's Nikkei Stock Average was 1.7% lower, as the Bank of Japan's tankan survey showed that business sentiment among major Japanese manufacturers had deteriorated more than expected in the three months to December. UGG Boots AustraliaMeanwhile, China's Shanghai Composite fell 2.1% after December's HSBC manufacturing purchasing managers index remained in contraction mode below the 50 threshold. The data are "highlighting a difficult time for manufacturers as growth in China teeters and world economies feel the breeze from the European debt crisis," said Capital Spreads. In other Asian Markets, Hong Kong's Hang Seng Index dropped 2.2% and South Korea's Kospi Composite fell 2.0%. On Wall Street Wednesday, stocks sank on the euro-zone debt drama. The Dow Jones Industrial Average fell 1.1% to finish at 11823.48, while the Standard & Poor's 500-stock index also lost 1.1% to 1211.82. The weakness in the U.S. and Asian stocks has put pressure on European markets early Thursday, as traders remained focused on the financial situation in the euro zone, with disappointing results from an Italian bond auction Wednesday generating fears the crisis is worsening. There were also fears that further euro-zone nations are at risk of being downgraded by rating agencies. Before last week's European Union summit in Brussels, ratings agency Standard & Poor's put France and most other countries in the currency bloc on review for a downgrade pending the results of the summit. France is seen at greater risk, as S&P warned it could lower the country's rating by two notches from triple-A, while the five other triple-A ratings in the euro zone were only threatened with a one-notch downgrade. UGG Classic Short Boots"Adding to the market uncertainty, Fitch Ratings agency downgraded 5 major European banks after the U.S. market close on Wednesday," noted Capital Spreads. It called London's FTSE 100 index down by six points at 5360, the DAX index also down by six points at 5669 and the CAC-40 index in Paris down by five points at 2971. Despite the weaker opening call for Europe, traders said the recent steep losses in equities provide an excuse for value hunters to creep in and snap up some battered stocks, so room for upside remains. "Volumes inevitably start to thin out ahead of the Christmas break next week and with many stocks looking increasingly depressed, ideal conditions for something of a Santa rally may well be forming," said IG Markets. Looking ahead, Spain will attempt to sell EUR3.5 billion of bonds maturing in 2016, 2020, and 2021 later in the session. Against the backdrop of Italy's 5 year bond yield hitting record levels Wednesday, investor focus will be very firmly trained on the yields and bid to cover figures. In the currency markets, the euro kept to a tight range after falling below the psychologically important $1.3000 mark Wednesday to its lowest level in 11 months. At 0715 GMT, the common currency was recently at $1.2993 against the dollar from $1.2983 late Wednesday in New York, and at Y101.36 versus the yen from Y101.31. The dollar was at Y78.02 from Y78.07. UGG Argyle Knit BootsOil and copper prices managed to recover modestly after steep falls Wednesday on concerns Europe's debt problems would impact global demand. However, gold remained under pressure with the spot metal recently down $2.60 at $1,566.50 per troy ounce. January Nymex crude oil futures were up 27 cents at $95.22 per barrel and February Brent oil futures were down 70 cents at $104.95. The March bund contract was up 11 ticks at 137.97. In terms of economic data, the euro zone will print PMI surveys at around 0900 GMT, while harmonized consumer price inflation for the region are due at 1000 GMT. Before that, the European Central Bank will publish its monthly report at 0900 GMT. In the U.K., retail sales are at 0930 GMT, while the Confederation of British Industry's industrial trends data are at 1100 GMT. In the U.S., the producer price index reading, the Empire State manufacturing report and weekly jobless claims are all due at 1330 GMT. Industrial production data are at 1415 GMT, followed by the Philadelphia Fed report at 1500 GMT.