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World stocks extend slump on Wall Street sell-off

HONG KONG - World stock markets sank on Friday, with European benchmarks opening sharply lower after Wall Street's sharp sell-off. Asian stock markets posted modest losses as strong reports on China's economy countered some of the pessimism.

In early European trading, Germany's DAX sank 1.8 percent to 9,235.69 while France's CAC 40 fell 1.3 percent to 4,189.81. London's FTSE 100 dropped 1.1 percent to 6,656.19. Wall Street was poised to open lower. Dow futures were down 0.3 percent to 16,440.00 while broader S&P 500 futures lost 0.4 percent to 1,917.40.

Japan's benchmark Nikkei 225 index dropped 0.6 percent to close at 15,523.11 and Hong Kong's Hang Seng fell 0.9 percent to 24,532.43. South Korea's Kospi edged 0.2 percent lower at 2,073.10. Australia's S&P/ASX 200 tumbled 1.4 percent to 5,556.40. In mainland China, the Shanghai Composite Index stayed in positive territory until the final hour and ended the day down 0.7 percent at 2,185.30.

Global stocks are reeling after U.S. markets had their worst day in months. Factors include weak corporate earnings from big companies such as Exxon Mobil as well as the approaching end of stimulus from the Federal Reserve. Economic sanctions on Russia that have increased tensions with the West also played a role, as did Argentina's debt default Wednesday. And there's also the general worry by investors that stocks are overpriced.

Desmond Chua of CMC Markets in Singapore said Asian markets fell despite healthy China manufacturing figures as investors took profits following strong rallies by many benchmarks over the past week or two. "Investors are sitting on sidelines and holding on to cash waiting for more events to unravel before buying on the dips," said Chua. While he expects a "slow and gradual climb" in Asian markets based on economic fundamentals, "we haven't seen a pullback in a long time and with valuations at such extensive levels I wouldn't be surprised if we get one in due time."

Upbeat reports on China's manufacturing weren't enough to neutralize the market's broad range of worries. Monthly surveys of manufacturing in China signaled that the world's second biggest economy perked up further in July thanks to recent mini-stimulus measures. An official purchasing managers' index rose to its highest in 27 months while a similar factory report by HSBC showed the strongest rate of improvement in a year and a half.

Investors are getting more clues about the state of the global economy with the release of a raft of economic reports. Markets were digesting manufacturing data for major eurozone economies. Later, reports are expected on U.S. employment, consumer spending and sentiment, construction spending and manufacturing. The forecast for the much scrutinized employment report is that U.S. employers added 225,000 jobs in July and that the unemployment rate remained at 6.1 percent, the lowest since 2008. In June, the economy added 288,000 jobs.

Benchmark U.S. crude for September delivery slipped 62 cents to $97.56 a barrel in electronic trading in New York. The contract on Thursday fell $2.10 to close at $98.17, its lowest level since March 17. Brent crude, a benchmark for international oils used by many U.S. refineries, fell 18 cents to $105.84 in London.

The euro drifted down to $1.3390 from $1.3391 late Thursday. The dollar rose to 102.95 yen from 102.78 yen.

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