Trade frictions disrupt global factory growth

Apart from China potentially cutting reserve requirements further this year, no other central bank is seen easing monetary policy, and the countries running current account deficits may have to hike rates further.

China's Caixin/Markit Manufacturing Purchasing Managers' index (PMI) declined to 51.0 in June from May's 51.1, with a sub-index showing new export orders contracting for the third straight month and the most in two years.

An official PMI survey on Saturday also fuelled concerns about the strength of the world's second-largest economy, where recent data including credit growth, investment and retail sales have disappointed.

The economy is feeling the pinch of an internal crackdown on debt and risky financing as well as external pressure from Trump's 'America First' protectionist policies.

The U.S. has threatened to impose duties on up to $450 billion of Chinese imports, with the first $34 billion portion set to go into effect on July 6. Beijing plans to retaliate.

This has caused anxiety in financial markets, leading to the worst performance on record for the yuan and the deepest monthly fall in Chinese stocks since January 2016.

Japan's June manufacturing PMI showed growth, but export orders contracted. Together with BOJ's "tankan" survey, the data raises worries that the "Abenomics" stimulus programme is sputtering just as the government and the central bank wanted to tap the brakes.