PARIS -- Manufacturers from Asia to Western Europe reported weaker expansion in July, although factories in Britain escaped the broader deceleration, along with Russia and some of the big countries of Europe's formerly communist east.
Japan reported a contraction for the first time in just over four years.
Surveys of purchasing managers at thousands of manufacturing firms preceded a readout due later on Wednesday from the United States, also tipped to show slower growth in a country where a housing market downturn is rattling global markets.
Growth touched its lowest in 17 months in the 13-nation euro currency area, with the Purchasing Managers Index for manufacturing activity showing dips in the four largest economies of Germany, France, Italy and Spain.
"All in all, it looks as though the combination of high oil prices, a strong euro, and softening global demand are finally starting to weigh on optimism in the export-oriented manufacturing sector," ING bank said.
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But economists did not see the latest surveys stopping the European Central Bank from tightening credit again this year, as it continues to battle inflation in a eurozone economy expected to continue growing healthily.
For the euro area, the PMI index of manufacturing activity slipped to 54.9 in July from 55.6 in June, staying comfortably above the 50.0 threshold separating growth from contraction.
There was even less reason to suspect growth concerns would get the upper hand of inflation fears in Britain, where manufacturing grew at its fastest pace in three years in July and output price inflation hit its highest in at least 15 years.
Britain's PMI index moved to 55.7 from 54.7 in June. Behind the headline figure, the survey carried out by NTC Research, the consultancy that conducts PMI surveys, showed average factory gate prices rose at their fastest since the series began in January 1992.
"Unless there is serious contagion from the credit and equity markets to the real economy, the inflationary risks inherent in the PMI survey are likely to have a significant influence on policymakers," Royal Bank of Scotland said.
Fears of a credit crunch shook markets again on Wednesday as further news of trouble among financial institutions compounded fears that excessively risky lending in the U.S. real estate sector could preface broader woes.
European shares lost more than 2 percent after similar dips in Japan and a 4 percent tumble in the rest of Asia. One main measure of world equity prices — the MSCI — lost 1.4 percent to stand around 6.5 percent down in a week and a half.
Other economies where manufacturers reported faster growth in July were Russia, Poland and the Czech Republic, although the pick-up on Europe's eastern flank was not universal, with Hungary showing a dip in pace.
ASIA COOLS, JAPAN SHIVERS
In Asia, the deceleration was broad, with Japanese factories reporting the first contraction in manufacturing since May 2003.
Japan's PMI index for July dipped to 49.0 in July from 50.4 in June, despite the export help of a weak yen, with rising oil and metals prices cited among reasons for output weakness which was most noted in electronics, food and drinks and basic metals sectors.
Asia's emerging market giants did better than Japan but even manufacturers in red-hot China reported activity dropping a gear. India's PMI index hit a 28-month low with a slip to 52.9 in July from 53.2 in June.
"Slowdown in the manufacturing sector is becoming more pronounced now," said Gaurav Kapur, senior economist at ABN Amro in India. "This suggests that both domestic as well as export demand is moderating."
The International Monetary Fund last week raised its forecast for world growth this year to 5.2 from 4.9 percent, as a slight downturn in projected U.S. growth was countered by robust expansion in China, India and Russia.
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