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Chinese factories post surprise October contraction

Activity in China's manufacturing sector unexpectedly contracted in October for a third straight month, an official survey showed on Sunday, fueling fears the economy may be cooling further in the fourth quarter despite a raft of stimulus measures.

Adding to those concerns, China's services sector, which has been one of the few bright spots in the economy, also showed signs of cooling last month, expanding at its slowest pace in nearly seven years.

The official Purchasing Managers' Index (PMI) was at 49.8 in October, the same pace as in previous month and lagging market expectations of 50.0, according to the National Bureau of Statistics (NBS).

The official non-manufacturing PMI fell to 53.1 in October, down from September's 53.4. Though still a fairly solid pace, it was the lowest reading since late 2008 during the global financial crisis, a similar survey showed.

A reading over 50 points suggests an expansion in activity while one below that level points to an contraction on a monthly basis.

China's factories continued to suffer from sluggish demand at home and abroad, which has saddled some firms with enormous amounts of idle capacity and forced them to cut prices, eating into profits.

As the first major indicators of business conditions in China released...


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