The flash Markit/HSBC Purchasing Managers' Index (PMI) for China fell to 49.6 in January, from December's 50.5, suggesting a mild slowdown at the end of 2013 has continued into the new year.
"This implies softening growth momentum for manufacturing sectors, which has already weighed on employment growth," said HSBC's chief China economist Qu Hongbin.
"As inflation is not a concern, the policy focus should tilt towards supporting growth.
Shanghai shares slipped 0.4 percent, though investors were still relieved that the country's central bank was flooding money markets with cash to ease a credit squeeze.
Worst hit was the Australian dollar which shed a third of a U.S. cent to $0.8795 as speculators sold it as a liquid proxy for growth in the Asian region.
MSCI's broadest index of Asia-Pacific shares outside Japan also lost 0.9 percent, while Australia's main index dropped 0.5 percent.
Japan's Nikkei pared its early gains to be up 0.2 percent on the day. The news from Japan has been better, with a Reuters survey of business sentiment improving for a third straight month in January to reach a high last seen in 2010 as optimists far outnumbered pessimists.
Wall Street provided few leads with the Dow ending Wednesday down 0.25 percent, while the S&P 500 added 0.06 percent and the Nasdaq 0.41 percent.
Later Thursday, Europe has its own version of early PMIs along with a round of unemployment figures.
The Eurozone composite PMI is seen edging up to 52.4 in January, from 52.1, led mostly by strength in Germany while France could again lag behind.
RATE OUTLOOKS DIVERGE
In currencies, it was all about central bank expectations. Sterling surged after a sharp fall in UK unemployment stoked speculation the Bank of England would have to bring forward the day when it starts hiking interest rates.
The euro duly fell to a one-year low against sterling of 81.81 pence, while the pound jumped over a cent on the U.S. dollar and held firm Thursday at $1.6571.
Across the pond, the Canadian dollar had tumbled to a more than four-year low on Wednesday after the Bank of Canada said it was growing more concerned about low inflation, leaving the door wide open to a cut in interest rates.
The central bank also took a rhetorical razor to the Canadian dollar saying a weaker currency would be positive for both exports and inflation.
The stark contrast with the situation in Britain, saw the pound soar 1.8 percent on the Canadian currency to the highest since mid-2009.
The U.S. dollar found some support from expectations that the Federal Reserve will make another $10 billion cut to its monthly bond-buying program at its policy meeting next week.
The dollar was modestly firmer on the yen at 104.54, while the euro marked time at $1.3544.
In commodity markets, U.S. crude eased in Asian trade after an industry report showed a sharp rise in crude stockpiles in the world's biggest oil consumer the United States.
U.S. crude oil futures eased 30 cents to $96.43 a barrel early Thursday after jumping more than a dollar overnight. Brent oil for March delivery lost 32 cents to $107.95.
Gold lost ground after its repeated failure to break above key technical resistance at $1,260 an ounce prompted investors to take profits. Spot gold was off at $1,233.05 per ounce, leaving behind Monday's peak of $1,259.85.