LONDON: European stock markets recovered early lost ground Monday as a solidUS manufacturing survey offset poor data which triggered fresh worries over the eurozone debt crisis.
In afternoon deals,London's FTSE 100 index of top companies was up 0.69 percent to 5,808.18 points,Frankfurt's DAX 30 gained 0.34 percent to 6,970.49 points and inParisthe CAC 40 was virtually unchanged.
Madridwas down 0.62 percent andMilanlost 0.99 percent, narrowing early losses as eurozone debt concerns resurfaced, withSpainandItalyin the firing line.
In foreign exchange trading, the euro sank to $1.3296 from $1.3336 inNew Yorklate Friday.
In the first hour of trade on Wall Street, the Dow Jones Industrial Average was flat, the broad-based S&P 500 rose 0.13 percent while the tech-rich Nasdaq climbed 0.12 percent.
"Traders are digesting a plethora of global manufacturing releases," Charles Schwab analysts said.
European stocks enjoyed bumper gains in the first quarter of 2012, boosted by encouraging US data and hopes of an end to the eurozone crisis but the outlook remains far from certain, dealers said.
Signs of weakness in the EU, where eurozone unemployment hit a record 10.8 percent in February, set a negative tone early in both US and European sessions.
Eurozone manufacturing activity dropped to a three-month low in March, with the weakness spreading to top economies Germany and France, a key survey showed.
The Purchasing Managers Index (PMI), a survey of 3,000 eurozone manufacturers compiled by Markit, fell to 47.7 points in March from 49 points in February. A score below the neutral 50 mark indicates contraction.
"Not a good day for the eurozone economy, with news of another sharp overall rise in the number of jobless in February following on from the (PMI) confirming that manufacturing activity contracted at an increased rate in March," said IHS Global Insight economist Howard Archer.
"It looks odds-on that eurozone GDP contracted again in the first quarter of 2012 after a drop of 0.3 percent quarter-on-quarter in the fourth quarter of 2011, thereby moving into recession. And the prospects for the second quarter of 2012 currently hardly look rosy."
But there was better news from theUnited StatesandChina, helping to underpin sentiment.
Chinasaid Sunday that manufacturing activity last month hit its highest level in a year, tempering recent concerns of a sharp slowdown in the world's number-two economy.
However a separate survey by HSBC showed a less optimistic picture than the official figure. HSBC's PMI fell to 48.3 in March from 49.6 in February, marking the fifth month manufacturing activity has remained in contraction.
Meanwhile,USmanufacturing accelerated in March, according to the ISM index. The widely watched measure rose from 52.4 percent in February to 53.5 percent last month.
"ISM manufacturing survey data offer further encouraging news that the sector continued to expand at a robust pace at the end of the first quarter," said Chris Williamson, chief economist at Markit.
Stock markets inEuropebegan on Monday with modest gains as upbeat Chinese manufacturing data boosted investor sentiment but they sank into the red after the stream of negative eurozone data.
Official figures showed that the eurozone unemployment rate hit a 15-year record high of 10.8 percent in February, up from 10.7 percent the previous month.
Before the weekend, European markets were buoyed on Friday after eurozone finance ministers agreed to boost their firewall against another debt crisis to about 800 billion euros ($1.1 trillion).
At the same time, Spain unveiled a tough austerity budget on Friday to produce savings of 27 billion euros in an effort to ease the strain on its public finances amid speculation Madrid could be the next to need a bailout.
Asian markets were mixed on Monday as investors digested the Chinese manufacturing figures.
Hong Kongshed 0.16 percent andSydneyslipped 0.14 percent, whileTokyorose 0.26 percent andSeoulgained 0.76 percent.Shanghaiwas closed for a public holiday.
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