Shares punctured by 2-pronged slowdown in China, Europe

LONDON, Nov 20 (Reuters): World stocks extended losses on Thursday as evidence suggested both the Chinese and European economies were slowing, while the yen slid to multi-year lows against the dollar and euro on bets on more Japanese money printing.

The China flash HSBC/Markit manufacturing purchasing managers' index showed factory output contracted in the world's second-biggest economy for the first time in six months.

In Europe signs were just as gloomy as the private sector in its biggest economy, Germany, grew at the slowest rate in 16 months, and in France a slight pick-up was overshadowed by the fastest drop in new business in over a year.

"There has been a little bit of relief in markets recently, but I think this will create another round of fears that the euro zone is losing momentum," said Emile Cardon, a euro zone strategist at Rabobank.

China's data had left Asian stocks excluding Japan's high-flying Nikkei at a month low, and Europe's dour figures saw stock markets in London, Frankfurt and Paris tumble 0.7, 0.6 and 1 per cent.

With the data also raising pressure on the European Central Bank as it ponders possible asset-buying schemes, euro zone government bond yields kicked lower and the euro fell for the first time in three days.

"I think this increases the chances that the ECB will actually start buying government bonds," added Rabobank's Cardon.

Markets were also still digesting Wednesday's meeting minutes from the U.S. central bank which suggested that it will still push ahead with its first post-financial crisis rate hike next year.

The minutes said a number of Federal Reserve officials felt it would be wise to provide some clarity soon on how swiftly rates might rise.