Soft data in the last few days have sparked concerns about the economic outlook for major economies. China's final HSBC Purchasing Managers' Index (PMI) dropped to 50.4 in April from March's 51.6 reading, indicating how serious sluggish demand from the U.S. and Europe is weighing on Chinese exports.
Meanwhile, data on Wednesday revealed that U.S. manufacturing activity fell to 50.7 in April, the lowest reading in six months. Experts say that these factors, combined with Europe's high unemployment and easing inflation, could trigger a shot of monetary stimulus from central banks.
"The world is falling apart. Well perhaps that's a bit of an overreaction, but it seems that data globally is dangerously close to contraction in many of the manufacturing surveys," said Chris Weston, chief market strategist at IG in a note.
After the Federal Reserve said on Wednesday that it was prepared to "increase or reduce" the monthly pace of its $85 billion in bond purchases, anticipation is building for the European Central Bank to cut rates by 25 basis points to a historic low of 0.5 percent at its meeting on Thursday.
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Mainland shares kicked off the month of May on a soft footing as markets resumed trade after the three-day Golden Week holidays.
"There are two big surprises in the PMI data. One is that new export orders are weaker - that really reflects global weakness. The other big surprise is weak import price pressures. We see price pressures coming down, which will allow the government to maintain stimulus measures as needed," said Frederic Neumann, co-head of Asian economics research at HSBC.
The benchmark Shanghai Composite hit 2,161 points earlier in the session, its lowest level since December 25.
Manufacturers suffered the brunt of the sell-off with pharmaceutical maker Shanghai Kaikai Industrial and JX Wind Energy the worst-performing stocks on the index, tumbling 10 percent each.