Asia shares slip, crude steadies

Crude oil futures took back some lost ground after skidding on news of a large weekly build in U.S. crude and distillate stockpiles and a smaller-than-expected drawdown in gasoline.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS extended early losses and was down 0.5 percent, while Australia's S&P/ASX 200 index was down 0.4 percent.

China's manufacturing activity stagnated in August as growth in output and new orders slowed, prompting companies to shed staff for the 34th month in a row, the private Caixin/Markit Manufacturing Purchasing Managers' index (PMI) showed. Its index slipped to 50.0 in August, the no-change mark which separates expansion of activity from contraction on a monthly basis, from 50.6 in July.

"Downward pressure on China's economy remains and government support to stabilize growth must continue," Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, said in a note accompanying the PMI report.

But China's official PMI survey was more upbeat and showed manufacturing activity picked up unexpectedly in August, nudging up modestly to 50.4, compared with the previous month's reading of 49.9.

"Markets aren't showing much reaction to the official China PMI, even though it edged up slightly above the 50-point level," said Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank. "It did not give much of a lift to Japanese markets, for which U.S. markets are a bigger factor."

Japan's Nikkei stock index .N225 was flat after earlier wavering between positive and negative territory, as the yen pulled further away from its overnight lows.

The dollar was down 0.3 percent at 103.10 yen JPY=, after rising as high as 103.54 on Wednesday, its highest since July 29. The euro was steady at $1.1162 EUR=.

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