Asian shares slumped on Friday, plunging deeper into the red after weak manufacturing data from China fuelled panic among investors over the clouding outlook for the world economy.

The dollar notched more losses against the euro and yen after minutes from the US Federal Reserve dampened hopes for a rate rise next month, while Asia-Pacific currencies were hit by concerns about regional growth.

Shanghai shares closed down 4.27 percent, or 156.55 points, at 3,507.74, ending their worst week since 2011 as worries over the flagging economy and the possibility of weaker government support weighed.

China stock market
Photo: Reuters

China’s benchmark index closed at almost exactly the same level as the bottom of a recent market rout on July 8, before Beijing stepped in with a vast rescue package for equities.

Hong Kong fell 1.53 percent, or 347.85 points, to finish the day at 22,409.62 — its lowest point since May 2014 — taking it into a bear market after a more than 20 percent slump from its April peak.

Tokyo shares fell 2.98 percent, or 597.69 points, to finish at 19,435.83, a more than three-month low and down 5.28 percent on the week.

Seoul fell 2.01 percent, or 38.48 points, to 1,876.07 as tensions climbed with North Korea, and Sydney dropped 1.40 percent, or 73.98 points, to close at 5,214.60.

“It seems like we’re seeing the makings of the 1997 Asian financial crisis all over, with emerging-market currencies plunging,” Nicholas Teo, a strategist at CMC Markets in Singapore, told Bloomberg News.

“China’s knock-on effect on the rest of the world is huge and China’s deepening economic slowdown will have an impact for the next couple of months or so.”

Asia got a negative lead from Wall Street after US shares sank more than 2.0 percent Thursday, with the Dow dropping to its lowest level for 2015.

Gold gained as investors looked for safer bets, rising to $1,150.67 in Asia compared to $1,138.80 late Thursday.

Sea of red 

Market sentiment has nosedived since China’s central bank devalued its currency last week in a surprise move widely seen as aimed at boosting the country’s flagging exports.

Stoking concerns, the preliminary reading of Caixin’s Purchasing Manager’s Index (PMI) came in at 47.1 this month, its worst reading since March 2009 and significantly below analysts’ forecasts.

The news sent Shanghai stocks plunging to lows not seen since before Beijing launched a huge rescue package last month to stop a rout that wiped some four trillion yuan off the benchmark.

“The (Chinese) economy continues to be on a downward trend and it’s not likely to pick up soon as there’s no clear driver for growth,” said We Wei, an analyst at Huaxi Securities in Shanghai.

“The stock market may drop further to seek a lower support,” he told Bloomberg News.

Commodity shares continued their slide as concerns about a slowdown in China, the world’s top importer of industrial metals and energy, continued to weigh.

A slump in raw materials prices has wiped off some $2 trillion from commodity stocks since the middle of last year.

US benchmark West Texas Intermediate (WTI) for October delivery, a new contract, lost 54 cents to $40.78 a barrel in afternoon trade, while Brent crude for October tumbled 62 cents to $46.00 a barrel.

The WTI September contract closed 34 cents higher at $41.14 in New York on Thursday, marginally higher than recent six and a half year lows.

Analysts said oil held above the key $40 a barrel level thanks to a weaker greenback, which makes it cheaper for international investors to buy dollar-denominated oil.

Investors will be watching the weekly US oil rig count, due out on Friday, to see if a slump in crude prices has started to dampen production in the world’s top economy.

In currency markets, the dollar stood at 122.92 yen, down from 123.38 yen in New York on Thursday.

The euro rose to $1.1284 and 138.68 yen, compared with $1.1241 and 138.69 yen in New York.

Bloomberg News contributed to this article 

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