More data later is expected to confirm that the euro zone is mired in recession while the prospects of a firmer U.S. recovery remain delicately balanced.

Equity and commodity markets slipped in Asia, where China's official manufacturing purchasing managers' index (PMI) showed factory activity contracted for a second straight month in September and a survey of Japan's big manufacturers showed sentiment worsening over the past three months.

Adding to signs that the region's vast factory sector is flagging in the face of strong global headwinds, Taiwan's PMI fell to its lowest in 10 months and South Korea reported a small year-on-year decline in exports.

"I don't see troubles stabilizing as yet. It will take a while longer until global demand shows signs of stabilization," said Saktiandi Supaat, foreign exchange research head at Maybank in Singapore.

HARD LANDING?

The China survey, the most closely watched by investors, underscored expectations that the motor of the global economy in recent years almost certainly endured a seventh straight quarter of slowing growth.

Overall, September's manufacturing PMI rose to 49.8 in September from 49.2 in August, which had been the lowest reading since November 2011. A PMI reading above 50 indicates expansion and below 50 contraction.

"The data continues to reinforce the hard landing that we have predicted for China, because this is the second consecutive month of a sub-50 reading," said Prakash Sakpal of ING in Singapore, which forecasts China's economic growth will be close to 7 percent in both the third and fourth quarters of this year.

The official data followed a private-sector PMI survey on Saturday by HSBC that showed overall factory activity shrank for an 11th consecutive month in September.

Two cuts to interest rates, an easing of compulsory bank reserve requirements that freed about 1.2 trillion yuan ($190 billion) for lending and approval of more than $150 billion worth of infrastructure projects have so far failed to arrest the decline in China's overall growth.

China's annual economic growth could ease to 7.4 percent in the third quarter, the seventh consecutive quarter of slowdown, before picking up to 7.6 percent in the final three months, according to the latest Reuters poll. That would leave 2012 growth below 8 percent, a level not seen since 1999.

JAPAN GROWTH STALLING, AGAIN

The global currents dragging on China are also being felt in its next largest rival Japan, where the quarterly Bank of Japan "tankan" survey of business sentiment underscored the central bank's view that growth in the export reliant economy will stall in the remainder of the financial year to March 2013.

The headline sentiment index for big manufacturers fell by 2 points to minus 3 in September, compared with three months earlier, showing the mood worsened in the last quarter after two previous quarters of improvement.

"The details of the tankan show that indexes for demand are weakening both domestically and overseas, reflecting the slowdown in the global economy and its impact on Japan," said Hiroaki Muto, senior economist at Sumitomo Mitsui Asset Management in Tokyo.

The heaviest drag on the global economy has been from Europe, where a festering three-year debt crisis is pulling the euro zone back into recession and weakening demand for Asian goods from one of the world's biggest economic blocs.

South Korea, home to export powerhouses such as Samsung Electronics and Hyundai Motor Co, reported an annual 5.1 percent fall in exports to the European Union in September, while shipments to the United States fell 0.4 percent.

Overall exports from South Korea, the first major exporter to release monthly trade data, fell 1.8 percent year-on-year. They have fallen in seven of nine months this year.

Indonesia reported that exports fell in August from a year earlier for the fifth straight month.

A factory PMI survey from Taiwan, another of East Asia's export-focused tiger economies, showed a slump in new export orders, with the pace of contraction the sharpest since November 2011.

PMI data was better from India, where growing orders and output helped manufacturing activity expand at a steady pace in September, although an increase in inventories could hurt growth in the future.

The HSBC manufacturing purchasing managers' index, which gauges business activity at India's factories, came in at 52.8 for September, unchanged from August's nine-month low but still in expansionary territory.

"Economic activity in the manufacturing sector held steady, supported by faster output growth and rising export orders," said Leif Eskesen, an HSBC economist. "However, a rise in inventories may dampen output growth in coming months."

The U.S. Federal Reserve and European Central Bank have unleashed massive monetary stimulus to prop up their economies, but it is not clear yet whether the economic tide in the industrialized world is starting to turn.

Manufacturing PMI surveys for the euro zone as a whole and big European economies, due on Monday, are expected to show the region's factory sector is still contracting.

A pair of reports from the U.S. Institute of Supply Management, also out on Monday, are likely to paint a blurred picture, with an expected small pick-up in manufacturing likely to be offset by a dip in services.

(Additional reporting by Stanley White and Chikako Mogi in Tokyo, Yati Himatsingka in Bangalore, Choonsik Yoo in Seoul and Jonathan Standing in Taipei; Writing by Alex Richardson; Editing by Neil Fullick)

(This stoory has been corrected to add a word in the third paragraph and fix transposed words in the fourth paragraph)

• A Permanent Economic Emergency