* World Stocks head for worst week of year
* China Aug PMI shrinks at fastest pace in almost 6-1/2 yrs
* Dollar extends losses as safe-haven U.S. debt yields fall
* Gold, Treasuries up on safe-haven bid
* Oil on longest weekly losing streak in 29 years
By Marc Jones
LONDON, Aug 21 (Reuters) - World stock markets tumbled
towards their worst week of the year on Friday and commodities
got another kicking, as more alarming data from China sent
investors scurrying to the safety of bonds and gold.
The data from China showed its giant manufacturing sector
slowing at the fastest pace since the depths of the financial
crisis in 2009, confirming worries about its health that have
been preying on economist's minds for months.
Emerging market assets took another hammering and oil prices
were on track for their longest losing streak since 1986, as
fears of a China-led deceleration in entire global growth
gripped sentiment.
The major developed economy markets were increasingly being
dragged into the sell-off. Wall Street was expected to open
firmly in red again later having already lost more than 2.5
percent this week.
Europe's bourses were also being beaten up. The pan-regional
FTSEurofirst .FTEU3 was down more than 1.5 percent as traders
shrugged off some reassuringly solid euro zone manufacturing and
services data in a third straight day of selling. ID:nL9N0RX02O
Britain's FTSE 100 .FTSE was 1.2 percent lower, Germany's
DAX .GDAXI , which is having its worst month since 2011, was
down just under 1.4 percent and France's CAC 40 .FCHI was off
1.1 percent. EU.
"Markets are going to continue to be somewhat disappointed
by the implications for Chinese growth ... and I don't have a
great deal of comfort to offer there," said Michael Kurtz,
Global Head of Equity Strategy at Nomura.
In the FX markets, the euro EUR= regained some of its
overnight momentum having been pushed to a two-month high by
those looking to get out of battered Asian currencies and China
proxies such as the Aussie and Hong Kong dollars. FRX/
The latest rout had been triggered as the Caixin/Markit
manufacturing index showed activity in China's factory sector
shrinking at its fastest pace in almost 6 1/2 years in August as
domestic and export demand dwindled. ID:nL3N10S379
That decline, coming on the heels of weaker-than-expected
data in July, plus this month's turbulent changes in the yuan
CNY= , and a brutal stock market plunge, heightened fears.
Shanghai stocks .SSEC dropped 4 percent to below the
200-day moving average for the first time since July 2014. That
brought losses for the week to 11 percent.
The Hang Seng index .HSI in Hong Kong was down 2.4 percent
for a weekly loss of 7.4 percent. Japan's Nikkei .N225
declined 2.9 percent, 5.2 percent on the week.
It all left MSCI emerging markets index .MSCIEF at its
weakest in four years and the 45-country "All World" index
.MIWD00000PUS down more than 3.2 percent on the week and
heading for its worst of 2015 so far.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
China's volatile markets http://link.reuters.com/myh35w
China PMIs http://link.reuters.com/zut45w
Global assets in 2015 http://link.reuters.com/dub25t
European bourses in 2015 http://link.reuters.com/pap87v
Currencies vs dollar http://link.reuters.com/tak27s
World interest rates: http://link.reuters.com/xyb96s
Oil prices http://link.reuters.com/beb23v
Commodities performance http://link.reuters.com/rac73w
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
PRECIOUS GAINS
China's woes continued to roil commodities. Oil resumed its
downward trend. U.S. crude CLc1 was at a more than 6-year low,
on track for its eight straight weekly decline as it slipped 0.5
percent to $41. Brent LCOc1 nudged $46 a barrel. O/R
Oil's torrid run of weekly losses is its worst since 1986
when OPEC ramped up production and sent it as low as $10 a
barrel.
Among currencies it was a similar story. The Australian
dollar AUD=D4 , considered a liquid proxy for China demand,
slid to $0.7285 at one point and was last trading at $0.7335,
down 0.2 percent for the day.
The Malaysian ringgit MYR= hit a pre-peg 17-year low and
South Korea's won KRW=KFTC fell again to take its losses to
1.8 percent against the dollar this week. EMRG/FRX
"The perfect storm that has enveloped EM local markets looks
set to continue," analysts for Barclays (LONDON:BARC) said in a note.
All the market ructions sent gold XAU= , seen as a good
asset to hold in difficult times, to its highest level in more
than a month.
Safe-haven U.S. Treasury yields US2YT=RR also slipped
further. They were already feeling a downward pull after minutes
from the Federal Reserve's July meeting this week offered little
clue of a near-term rate hike.
"The U.S. markets have held up well of late, being viewed as
somewhat of a safe haven," wrote Chris Weston, chief market
strategist at IG in Melbourne. "This view seems to have
deteriorated somewhat with the S&P 500 closing below its
multi-month trading range - a fate the credit markets and the
U.S. yield curve have been screaming for some time."
Lower Treasury yields and the stronger euro in turn weighed
on the dollar. The currency traded at 122.68 yen JPY= , the
lowest in more than five weeks, after sinking from an overnight
high of 124.16. It was at £1.1278 to the euro. EUR