Asian stocks drop on China’s data, French election and downbeat earnings 

Asian stocks dropped for the third consecutive session on China’s downbeat PMI manufacturing, worries over Europe’s debt crisis, the French elections, and the upcoming key policy-setting events this week.

The MSCI Asia Pacific Index dropped 0.2% to 123.97 at 14:02 in Tokyo, although the IMF received more than 430 billion in pledges at the G20 meeting during the weekend in Washington.

Sentiment was dampened by the contraction in China’s manufacturing sector in April, according to the HSBC flash PMI which dropped below 50 for another month although the reading showed a slight improvement from the previous month.

Meanwhile, caution is building up ahead of key policy-setting events this week, where Bank of Japan will release its monetary policy decision while the Feds will hold a two days policy meeting.

Adding to the downside pressures on the Asian equities were the prospects of Europe opening lower on Monday after Netherland’s coalition government collapsed over the weekend while Nicolas Sarkozy was beaten by socialist Francois Hollande.

Investors believe Francois Hollande may win French presidency after Nicolas Sarkozy came second after the first round of votes over the weekend. Meanwhile, the Dutch coalition collapsed on Saturday amid disagreement over spending and taxes.

Adding to pessimism was the lower-than-expected profits from Daewoo Engineering, Tokyo Steel and China Mobile, unlike their US counterparts, where Microsoft’s and General Electric’s were among the companies with better-than-expected earnings.

Xerox Corp and ConocoPhillips are among the US companies set to report their first quarter results later today, while data will include Germany and Europe’s PMI manufacturing and services.