Asian stocks and commodities began the second half of the year on a sour note on Thursday, with Japanese stocks sliding to a seven-month low after manufacturing data showed China's rapid economic growth was slowing.

While China's growth had been expected to cool from double-digit levels, the reports underscored investors' fears that the global economic recovery may be losing momentum amid Europe's debt crisis and persistent weakness in the U.S. housing and labor markets.

An official survey showed the pace of Chinese manufacturing activity slowed in June to the lowest since February, while HSBC's separate purchasing managers' index dropped to a 14-month low, with outright drops in output and new orders.

By contrast South Korea was booming, with June export figures showing a record trade surplus, echoing uneven economic reports from other regions in recent weeks which have prompted investors to dump riskier assets.

But all eyes were on China, which has largely led the global recovery.

China's economy growth is at a critical stage of leveling off after the climb, said Zhang Liqun, a Chinese government economist, said in a statement regarding an official manufacturing survey.

Qu Hongbin, chief economist for China at HSBC, said the economy was clearly cooling but fears about hard-landing are overplayed. We expect China to achieve around 9 percent growth in the second half, underpinned by massive ongoing investment and robust private consumption.

Still, with Friday's June U.S. payrolls number expected to show a shrinking labor market for the first time since February, wary investors were shifting more money to havens such as U.S. Treasuries and the yen.

Japan's Nikkei share average <.N225> fell 1.7 percent to the lowest since November 30, 2009. A mix of technology stocks and exporters were the top drags on the index.

Stock investors drew only slight comfort after a Bank of Japan tankan survey showed Japanese manufacturers turned optimistic about business conditions for the first time in two years, thanks to solid exports to Asia.

The market wasn't expecting much from the tankan, but it may have helped slow selling a bit, said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Morgan Stanley Securities in Tokyo.

Resource-related shares were under fire after the Chinese data, dragging down Australia's benchmark index 1.8 percent <.AXJO> and the MSCI index of Asia Pacific stocks outside Japan 1.3 percent <.MIAPJ0000PUS>.

CHINA SLOWS, KOREA SPEEDS UP

Despite tumbling nearly 10 percent in the second quarter, Asian share valuations still do not appear compelling to buyers as analysts slash company earnings forecasts due to expectations of weaker growth.

The MSCI ex-Japan index was trading at a multiple of 12.1 times 12-month forward earnings expectations, only slightly lower than the five-year average of 13.2, Thomson Reuters I/B/E/S showed.

The three-month change in 12-month forward forecasts for earnings in Asia ex-Japan was 2 percent, the lowest in a year.

U.S. stock futures were down 0.9 percent, after the S&P 500 and Dow Jones Industrial Average <.DJI> both finished 1 percent lower overnight.

In the foreign exchange market, the Swiss franc and yen benefited from an increasing distaste for other riskier currencies.

The euro remained under pressure, even though a three-month funding tender in the euro zone on Wednesday did not reflect a mad scramble by banks for cash, as some market watchers had feared.

The single currency hit a record low against the Swiss franc, falling 0.7 percent to 1.3084 francs, and lost 0.4 percent against the yen to 107.61 yen, closing in on an 8-1/2-year low.

Spain, which is lumped into a group of indebted European countries facing intense market scrutiny, will hold an auction for 5-year bonds later on Thursday. Analysts were optimistic about the sale, though Moody's warning over its top rating on Spanish government debt overnight could be a damper.

The Australian dollar was down 0.8 percent to US$0.8330, having shed 4 cents in less than two weeks.

Oil prices fell for a fourth consecutive day, down 1.3 percent to $74.69 a barrel on concerns about slowing growth in China and a stronger U.S. dollar.

Three-month copper futures on the London Metal Exchange were down 1 percent, down 17 percent since April.

(Editing by Kim Coghill)

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