China’s manufacturing sector continued to shrink in May, according to preliminary data released Thursday.

HSBC’s Flash Purchasing Managers’ Index fell to 48.7 in May from 49.3 the previous month. Any reading below 50 indicates the manufacturing sector has been shrinking.

While the news comes as yet another sign of weakness for China, the outlook for the world’s second largest economy is still far from clear.

Mark Williams, chief Asia economist for Capital Economics, said the latest PMI report seems to indicate a slowdown in China’s gross domestic product, the broadest measure of the economy. He said it also runs counter to other reports showing that income is growing for urban households and migrant workers.

“This weak PMI reading, and the general climate of economic uncertainty, suggests that a pickup in consumer spending growth is unlikely to lift the economy out of its current malaise,” said Williams, in a research note.

But he believes the economy could gain steam going forward, with a boost from the government.

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A Pakistani court on Wednesday imposed a 33-year sentence on a doctor who assisted the CIA in the hunt for Osama bin Laden, prompting dismay among U.S. officials and warnings that the punishment will exacerbate already-strained relations and could lead to cuts in aid.

Shakil Afridi, 48, a government surgeon in the semiautonomous Khyber Agency along the Afghanistan border, was convicted of treason for using a vaccination drive to try to gather DNA samples from the Abbottabad compound where bin Laden was in hiding.

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“French bonds rose, sending five-year yields to a record low, and Austrian debt gained as investors favored higher-yielding alternatives to German securities amid the deepening euro-area sovereign debt crisis.

Austria’s five-year note yields dropped to an all-time low after a European Union summit ended with leaders divided over joint debt sales and offering no relief for Spain. AAA rated countries said joint borrowing would force up their own interest rates and give deficit-prone states an incentive to continue spending. Germany’s bonds erased gains that had pushed 10-year yields to a new low after business confidence fell more than analysts forecast in May.”

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The ratio of total short selling by value on Hong Kong’s mainboard versus the shares traded reached almost 1-to-7 yesterday, the highest level since Feb. 25, 1999, according to data compiled by Bloomberg. The benchmark Hang Seng Index declined 0.6 percent today at the midday trading break.

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Time to squeeze ’em

While the EU leaders discuss eurobonds during a six-hour working dinner in Brussels, three The Telegraph reporters live blog the event.

Read the reporting here.

Please, I am begging for someone to fact check this. Please do not tell me we’ve been killing Afghan kids for years by dropping our stupid fucking candy bars on them!!! This shit makes me angry as fuck.

Approximately 1.4 million M&Ms were to be delivered via Container Delivery System in a single package with a weight of 1500 lbs. Due to a malfunction in the static line, the parachute failed to deploy and the container crashed through the roof of a local school at nearly 100 miles per hour.

Upon impact, the force of the rapidly settling candies caused the sides to explode outward, causing what physics professor Dr. Rosella Schwartz described as, “essentially a 360 degree anti-personnel mine full of chocolate flechettes.”

By “flechettes”, Schwartz is referring to the M&Ms’ candy shells, which shattered and spalled upon entering the bodies of the victims and also caused more numerous and severe secondary injuries.

Dr. Manuel Velez of the Red Cross, one of the first medical personnel at the site of the impact, had a similar assessment of the candy shells’ damage.

“I’ve seen a lot of injuries inflicted on civilians by military ordnance, but this was much worse,” Velez said, stooping to change the bandages on one of the victims while pointing out the many blue, green, and yellow splotches.

“The worst were the peanut M&Ms. The soft chocolate acted as a sabot around the peanuts, so basically these things were candy-coated penetrator rounds.”

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Bankia will get another capital injection as new management tries to sort out the details on how to bolster the banks liquidity standing. This news is probably what took our markets off the lows.

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Safe heaven bets continue to rise in the Eurozone….

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The BoE made no changes to policy. They stand ready to pour money on top of slow growth.

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“China’s leaders pledged to intensify “fine-tuning” of policies in the second government statement in four days signaling a commitment to growth as Europe’s debt crisis escalates and domestic demand slows.

“We must proactively take policies and measures to expand demand and to create a favorable policy environment for stable and relatively fast economic growth,” the government said on its website today summarizing a meeting of the State Council, or Cabinet.”

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The numbers are on the wrong side of confidence that the debt woes are going to be solved in a timely fashion.

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“The evidence of a China slowdown which is somewhat worse (perhaps much worse) than what the market was expecting continues to pile up. ”

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China is not going to let growth die on the global vine.

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That’s about two months per human fetus.

A British citizen in Bangkok has been arrested after Thai police found six roasted human foetuses packed in his luggage.

Chow Hok Kuen, who is 28 and of Taiwanese origin, was held by police after the grisly discovery was made in Bangkok’s Chinatown district yesterday.

Reports says the six foetuses had been covered in gold leaf after being roasted as part of a black magic ritual.

It is not clear where the bodies came from, but Chow Hok Kuen is believed to have been attempting to smuggle them into Taiwan.

The bodies were reportedly found in a different hotel from the one Chow Hok Kuen was staying at, but were in his luggage.

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The G-8 sang kumbayah this weekend vowing to do what is necessary to keep Greece in the Euro.

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Obama and Cameron have made Merkel responsible for developing a plan for growth for Europe. Merkel is resisting a looser monetary policy for the European Central Bank.

Read the article here.

“Europe could strengthen its monetary union by giving European politicians the power to declare a sovereign state bankrupt and take over its fiscal policy, the former head of the European Central Bank said in unveiling a bold proposal to salvage the euro.

The plan offered by Jean-Claude Trichet, who stepped down last November as ECB president, would address a fundamental weakness of the 13-year-old single currency, the survival of which is threatened by the Greek crisis. ”

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Spanish banks will have to do a better job in cleaning up their balance sheets. Bad loans jumped by 90% from a yoy basis.

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The finance ministers of Spain have tried in vain to quell rumors of Spanish bank runs. As a result European markets are down and Spanish yields are blowing out.

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Thankfully, rates fell and money was raised.

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