LONDON European stocks slipped on Thursday, keeping the benchmark world equity index below recent 8-month highs, while the dollar was weaker against the yen as data showing China's factory activity shrank renewed concerns about global growth.
The HSBC flash PMI, the earliest indicator of China's industrial activity, fell to 48.1 in March from February's four-month high of 49.6, with new orders sinking to a four-month low.
It raises the prospect for a further monetary policy easing to help underpin growth, although lingering inflation risks put Beijing's policymakers in a dilemma.
"There is a concern, which I share, that we have a rather uneven recovery with the euro zone periphery in particular rather weak and former growth engines like China also not seeing a pronounced recovery," Gerhard Schwarz, head of equity strategy at Baader Bank, said.
"I would not say it's a deep correction (in equities)... Markets are over bought and looking for the next catalyst."
MSCI's main world equity index was steady on the day, having hit its highest level since August earlier in the week.
European stocks lost a third of a percent while emerging stocks were steady.
Brent oil was down 0.6 percent at $123.43 a barrel.
Bund futures gained 42 ticks, drawing in some safe-haven demand. The dollar lost a third of a percent to 83.15 yen although it was steady against a basket of major currencies. The euro was unchanged on the day at $1.3203.
(Additional reporting by Toni Vorobyova. Editing by Jeremy Gaunt.)