* Shaky China, Europe factories dent global outlook
* European mfg comparison: http://link.reuters.com/xup22v
* European mfg momentum: http://link.reuters.com/har72w
By Sumanta Dey and Andy Bruce
BENGALURU/LONDON, Oct 1 (Reuters) - World economic growth
lost momentum in September, with China's factory output
shrinking again, euro zone manufacturing growth slowing, and
U.S. activity steady.
The latest business surveys across Asia, Europe and the
Americas paint a gloomier picture and are likely to prompt more
calls for central banks to loosen monetary policy even further.
"The data probably increases the case for more stimulus in
certain parts of the world, especially from the People's Bank of
China and the European Central Bank," said Philip Shaw,
economist at Investec in London.
"Those economies that are at less advanced paths of the
recovery cycle -- the key example is the euro zone, where we're
looking at more disinflation -- may well find more stimulus is
in order."
CHINA MANUFACTURING STILL CONTRACTING
Surveys of China's factory and services sectors showed the
world's second largest economy may be cooling more rapidly than
earlier thought, with deeper job cuts.
Taken together with a stock market crash in Shanghai during
the summer and a surprise devaluation of the Chinese yuan, the
data highlight just how difficult it will be for policymakers to
steer China's economy out of the biggest slowdown in decades.
"Two straight months of manufacturing sector contraction
with a depressed equity market suggests China's third-quarter
GDP growth is likely to have slowed to 6.4 percent," economists
at ANZ said.
The official manufacturing Purchasing Managers' Index
(PMI)in China inched up to 49.8 in September from 49.7, but was
still below the 50 level on the index separating growth from
contraction.
Private data vendor Caixin/Markit reported its China PMI
slipped to 47.2 in September though, the lowest reading since
March 2009.
In China's service sector the official PMI stood at 53.4,
the same as August, according to the National Bureau of
Statistics.
The Caixin/Markit service sector PMI fell for a second
consecutive month to 50.5, its lowest level since July 2014.
China is a major importer of raw materials, especially from
commodity producers such as Australia, Brazil and Canada, so a
slowdown in demand is being felt globally.
Concerns over China and global market volatility figured
high on a list of reasons the U.S. Federal Reserve did not raise
interest rates last month.
MORE ECB STIMULUS AS PRICES DROP
In the euro zone, where the central bank is six months into
a 1.1 trillion euro asset purchase programme, the PMI survey
data showed manufacturing output weakened slightly last month.
Markit's final euro zone manufacturing PMI was 52.0 last
month, lower than August's 52.3.
ECB policymakers, led by President Mario Draghi, have hinted
the 60-billion-euro-a-month bond-buying scheme could be
enhanced in size or duration if inflation is seen missing its
goal of near 2.0 percent even by 2017.
Factories in Europe's number one economy, Germany,
performed better, however, driven by strong output from consumer
goods producers and rising new orders.
The PMIs also showed French manufacturing grew faster than
first thought in September, while British factory growth lost
steam and shed jobs for the first time since 2013.
The drag on the UK economy is likely to weigh on the Bank of
England which is considering when the appropriate time is to
raise interest rates from the current 0.50 percent, where they
have stayed since March 2009.
U.S. MANUFACTURING SLUGGISH
In the Americas, growth in the U.S. manufacturing sector
rose slightly in September but was still at its second-lowest
level since Oct. 2013, according to Markit.
The final U.S. manufacturing PMI inched higher to 53.1 in
September from 53.0 in August, which marked the lowest level
since Oct. 2013.
"The U.S. manufacturing sector has seen a distinct loss of
growth momentum in recent months, endured the worst performance
for two years during the third quarter," said Chris Williamson,
chief economist at Markit.
"Headwinds include the rising dollar, weak demand in global
markets, a downturn in business investment and financial market
jitters," he added.
An alternative U.S. manufacturing survey from the Institute
of Supply Management (ISM) showed the pace of factory activity
slowed in September while remaining at its lowest level since
May 2013.
Business conditions in the Canadian manufacturing sector
fell to a record low in August as the country continues to feel
the effect of cheap oil prices.
The RBC/Market manufacturing PMI for Canada fell to 48.6
last month from 49.4 in August and is now at the lowest level in
the survey's five-year history.
Canada was in a mild recession in the first half of the year
as the oil-exporter has been hurt by the drop in the price of
crude oil.
In Latin America, Brazil's manufacturing PMI rose to 47.0 in
September from 45.8 in August but the sector has now contracted
for an eighth straight month.
Brazil's economy is struggling through its worst recession
in 25 years, leaving the nation's long-crippled manufacturing
sector reeling. Manufacturers have laid off nearly half a
million workers over the past 12 months as output shrunk to 2009
levels.
Mexico's HSBC/Markit manufacturing PMI fell to 52.1 from
52.4 in August.