Markets lifted by Chinese manufacturing expansion

NEWS that China&rsquo;s manufacturing sector expanded in May for the third consecutive month boosted optimism and lifted world markets yesterday.<br /><br />China&rsquo;s official purchasing managers&rsquo; index (PMI) fell to 53.1 from 53.5 in April, but remained above the critical 50 level, which separates expansion from contraction.<br /><br />Investors were relieved that the pace of contraction was slowing in the world&rsquo;s third-largest economy and European and US markets rallied strongly yesterday on the back of the Chinese data and better-than-expected Eurozone PMI.<br /><br />The FTSE 100 rose by 2 per cent and the S&amp;P 500 jumped by 2.5 per cent.<br /><br />The markets were tracking earlier gains in Asia, where the Nikkei rose 1.6 per cent and the Australian dollar hit an eight-month high.