London - European shares extended a week-long rally on Thursday as manufacturing surveys in China and the United States boosted confidence over the global economic recovery.
However, analysts said similar surveys for euro area activity due later are expected to show the region stuck in recession, which could sour sentiment, though trading is likely to be subdued with Wall Street closed for the Thanksgiving holiday.
Europe's FTSE Eurofirst 300 index rose 0.2% in early trading to 1 099.31 points, with London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX about 0.3% higher.
The China HSBC flash Manufacturing Purchasing Managers Index rose to a 13-month high of 50.4 in November, pointing to a revival in economic growth after seven consecutive quarters of slowing.
"There have been a lot of concerns regarding the outlook for global growth. In this context, any improvement in Chinese data is welcome, given that investors are still risk averse," said Robert Parkes, equity strategist at HSBC Securities.
MSCI's world equity index was up 0.25% at 325.48 and on track for its best week since mid-September as the improving economic outlook adds to hopes for resolution of the US fiscal crisis and an aid deal for Greece.
The prospects of a deal to help Athens were boosted when German Chancellor Angela Merkel said on Wednesday after the failure of overnight talks that an agreement was possible when euro zone ministers meet on Monday.
The euro rose to near a two-week high, up 0.2% at $1.2855, on revived hopes of a deal. It is also at a 6-1/2 month high against the yen as investors expect more monetary easing in Japan.
China's role as a major buyer of many of the world's commodities meant the latest data gave a boost to prices. London copper rose 0.5% to $7 730.50 a tonne, and spot gold inched up 0.1 percent to $1 730.89 an ounce.
However, Brent crude oil eased under $111 per barrel as the signs of recovery in China were offset by an easing of tensions in the Middle East, where a ceasefire between Israel and Gaza's Hamas rulers took hold on Thursday after eight days of conflict.
Brent slipped 32 cents to $110.54 a barrel, although US crude was up 11 cents at $87.49.