BANGKOK - Stock markets drifted Wednesday as the boost from stronger Chinese manufacturing was overcome by Europe's economic malaise and heightened geopolitical risks after the U.S. and Arab nations attacked the Islamic State group's headquarters in eastern Syria.
France's CAC 40 was little changed at 4,358.30 while Germany's DAX shed 0.2 percent to 9,576.82. Britain's FTSE 100 dropped 0.2 percent to 6,665.45. Futures pointed to gains on Wall Street after sliding Tuesday. Dow futures were up 0.2 percent at 16,988 and S&P 500 futures gained 0.2 percent to 1,975.40.
"Bulls and bears continue to play a game of cat and mouse, with the bulls looking for a floor in the recent sell-off while the bears consider adding to shorts. With choppy price action being the dominant theme, patience will be key in this environment," said IG market strategist Stan Shamu. "The losses seen in European and U.S. trade haven't quite been replicated in Asia today."
Japan's Nikkei 225 stock average shed 0.2 percent to 16,167.45 while Seoul's Kospi rose 0.3 percent to 2,035.64. Hong Kong's Hang Seng gained 0.4 percent to 23,921.61. Australia's S&P/ASX 200 dropped 0.7 percent to 5.375.80. China's Shanghai Composite jumped 1.5 percent to 2,343.57. Southeast Asia markets mostly rose.
China's manufacturing unexpectedly improved in September, according to a preliminary survey released Tuesday, though there were some mixed messages in the report. New orders and exports increased at a faster rate but employment fell. Overall, the report helped to ease jitters about a deeper slowdown in the world's No. 2 economy.
A closely watched gauge of business activity for the region fell to a nine-month low. Investors have been dealing with meager economic growth in Europe for months. The eurozone economy has been flat or barely growing since April, hobbled by the lingering effects of a debt crisis, uncertainty over a conflict in Ukraine and a lack of confidence among European consumers, businesses and banks. European market indexes sank after the economic news. Germany's DAX fell 1.6 percent, France's CAC 40 fell 1.9 percent and the U.K.'s FTSE 100 lost 1 percent.
Along with bad economic news, investors had geopolitical concerns to worry about. The U.S. and five Arab nations attacked the Islamic State group's headquarters in eastern Syria in nighttime raids Tuesday. U.S. aircraft as well as Tomahawk cruise missiles launched from Navy ships in the Red Sea and the northern Persian Gulf were used.
"Geopolitical risk, which has been simmering in the background, is back to the fore" said CMC analyst Desmond Chua. "Helping to limit losses in the equity markets, however, was the continual outperformance of economic indicators, with US manufacturing activity clocking a four-year high," he said. "Better-than-expected Chinese factory day also alleviated concerns that the second largest economy was facing a slowdown."
Benchmark U.S. crude was up 19 cents at $91.74 a barrel in electronic trading on the New York Mercantile Exchange.
The euro rose to $1.2855 from $1.2841 late Tuesday. The dollar dropped to 108.55 yen from 108.80 yen.