* Global stock marginally lower after European PMI data
* Fiscal cliff impasse weigh on markets
* BOJ tankan business mood survey worsens, yen at 9-mth low
By Marc Jones
LONDON, Dec 14 (Reuters) - Signs recession is deepening in
the euro zone and an impasse in U.S. budget talks subdued global
shares and Europe's bond markets on Friday, taking some of the
shine off a week of mainly steady gains in risk assets.
Disappointing German manufacturing sector figures and a rise
in euro zone unemployment overshadowed a small pick-up in wider
purchasing manager data which polls around 5,000 businesses
across the bloc and is viewed as a reliable growth indicator.
The German manufacturing sector slipped to 46.3 in December
from 46.8 the previous month, remaining well below the 50
threshold that divides growth from contraction and missing the
consensus Reuters poll forecast for a rise to 47.2.
European shares were down 0.1 percent at 1133.77
points at 1320 GMT as the disappointment lingered, although
rises earlier in the week left them on course for a 0.4 percent
"All in all, the picture for the EMU (euro zone) economy has
not changed much after today's data," said Annalisa Piazza, an
economist at Newedge Strategy in London. "EMU GDP is expected to
continue to contract in Q4-12 and there are no signs of
improvement for the first part of next year."
Following a similarly mixed session for Asian equities,
global stocks were down fractionally at 336.73
points, nibbling away at a 6 percent rise over the last three
U.S. stock futures briefly turned negative after consumer
prices data pointed to muted inflation pressures but S&P 500
futures rose 0.2 points by 1345 GMT.
A lack of progress in budget talks in the United States over
$600 billion of tax hikes and spending cuts scheduled to start
in January also continued to hang over markets.
President Barack Obama and House of Representatives Speaker
John Boehner held a "frank" face-to-face meeting late on
Thursday. Failure to avert the "fiscal cliff" as
it has been dubbed, could derail the struggling U.S. economic
recovery and also snuff out encouraging signs from China.
"We had the big Obama meeting yesterday and nothing seems to
have come out of it," said Philip Marey, a U.S. focused
economist at Rabobank.
"Christmas is getting closer but it doesn't seem like they
are going to get there before then and it could take until early
The news was not all gloomy, however. After more than eight
hours of late-night talks at a summit in Brussels, EU leaders
promised to push ahead with a pan-euro zone mechanism to wind
down problem banks.
It is something many crisis observers believe could help
finally break the toxic link between troubled banks and national
finances and the crippling impact their bailouts typically have.
China shares also outperformed Asian peers after the HSBC
flash purchasing managers' index hit a 14-month high of 50.9,
the fifth straight monthly gain, underlining the world number
two economy's improving growth prospects.
Commodity markets reacted positively, with copper
and oil both edging up, albeit staying within their
tight recent ranges. Brent crude, up at just under $109 barrel,
was on course to eke out its first weekly gain this month.
"Oil is particularly dominated by Chinese potential demand,
and any sign of an upturn in China tends to have a positive
effect," Tony Machacek, a broker at Jefferies Bache in London,
Data from Japan was less good, however, as business
The slide bolstered expectations that the Bank of Japan will
ease policy further to support the weak economy next week and
pushed the yen to a near 9-month low against the dollar
and an 8-month low against the euro.
Japan holds elections on Sunday with conservative Liberal
Democratic Party (LDP) set for a resounding victory according to
polls. It has cemented speculation its leader, Shinzo Abe, will
be in a position to push for bold BoJ easing.
"Abe has been making pretty strong comments about inflation
targeting and if we look at the economy Japan needs a lower
currency without a doubt," said Maurice Pomery, managing
director at consultants Strategic Alpha.
"This is going to put pressure on the BoJ. It's the start of
a move lower in the yen that has a long way to go."
The euro fell below $1.31 after the PMI data before
steadying at around $1.3080 and staying on course for its
biggest weekly gain against the dollar in three weeks.
European bond markets were also quiet with German government
bonds little changed and Spanish and Italian bonds slightly
higher as the EU banking progress offset the PMI and U.S. budget