LONDON/SINGAPORE (PNN) - September 1, 2011 - Factory activity stalled last month as new orders tumbled, heightening fears that the global economy is heading for another downturn, a series of surveys showed on Thursday.

The Purchasing Managers' Indexes showed manufacturing activity contracted in the euro zone for the first time in almost two years in August, echoing earlier data from South Korea and Taiwan, where new export orders fell sharply.

Britain's manufacturing sector shrank at its fastest pace in over two years, hurt by a sharp drop in demand for exports, and figures are expected to show factory activity declined in the United States for the first time since the start of the global Depression.

Although China's official PMI increased slightly, its first rise since March, it also showed the effects of slowing demand in Europe and the United States.

HSBC's PMI figure for China, which relies more heavily on private companies than the large state-owned enterprises that dominate the government's PMI report, showed factory activity contracted for a second consecutive month.

"The key thing they show is that we are not out of the woods. The economies are very vulnerable to any shock, (of) which at this moment in time there are a few," said Jeavon Lolay of Lloyds Banking Group.

"What is happening in the euro zone is very important and in the U.S. growth has weakened markedly in the last two quarters," he added.