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Dow to open lower on China worries, U.S. manufacturing data on tap

Published: 13:50 01 Sep 2011 BST

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U.S. markets indicated a lower open Thursday on worries of a Chinese export slowdown, and ahead of key American manufacturing data, with investors looking for clues on the state of the economy.

In pre-market trading, Dow Jones futures were down 50 points, or 0.43%, at 11,553, while futures on the S&P 500 were trending 3 points, or 0.25%, lower at 1,214. Futures on the tech-focused NASDAQ were down 2 points, or 0.09%, at 2,238.75.

Overnight, Chinese export data was released, showing the export orders sub-index fell to 48.3 in August from 50.4 in July, fueling fears of a possible slowdown in Chinese exports to major Western economies.

A day before key nonfarm payrolls, the number of Americans seeking new jobless benefits fell last week but remained at a level associated with slow hiring trends, U.S. government data has showed. New applications for unemployment compensation dropped 12,000 to 409,000 in the week ended August 27. Initial claims from two weeks ago were revised up to 421,000 from an original reading of 417,000.

In a separate report Thursday, the U.S. government also said the productivity of U.S. businesses and workers in the second quarter fell more sharply than originally reported.

Investors are also awaiting the release of the U.S. Institute for Supply Management’s manufacturing index, due at 10 am EDT. A survey of economists taken by Bloomberg News expects that U.S. manufacturing shrank to 48.5 in August from 50.9 in July. A reading of over 50 indicates expansion, while under that figure indicates contraction. The index last fell below 50 in July 2009.

Bank of New York Mellon (NYSE:BK), the world’s biggest custody bank, was down 1.9% to $20.27 in early trading after its chairman and CEO Robert Kelly stepped down in a dispute with directors over the way the company was run.

In Canada, Toronto-Dominion Bank (TSE:TD)(NYSE:TD) reported a 23% increase in third quarter profit and hiked its dividend for the second time this year. The results were ahead of analyst expectations.

Net income grew to $1.45 billion, or $1.58 per share, from $1.18 billion, or $1.29 per share, last year on the back of higher loan growth in both the U.S. and Canada. The country's second-biggest bank boosted its dividend payout to 68 cents per common share for the current quarter, up 2 cents.

Tech heavyweight International Business Machines (NYSE:IBM) was down 51 cents at $171.4 following news of its $387 million acquisition of Toronto-based Algorithmics, a maker of financial analysis software. IBM said Algorithmics has more than 350 clients, including 25 of the world's top 30 banks.

Commodities

Gold futures were off 0.32% at $1,825.80, and NYMEX crude was down 6 cents or 0.07% at $88.75.

Europe

European bourses were trading lower Thursday, hit by the Chinese export growth worries as well as slower euro zone PMI data. The Eurozone manufacturing sector showed signs of weakness as it contracted for the first time in almost two years with German activity, which has supported growth in the region, slowing.

In London, the market traded higher on news that the U.K.'s biggest banks are set to escape any major restructuring until after the planned 2015 general election, which is welcome news for the country's beleagured banking sector.

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