London - European stock markets rose modestly Monday despite earlier big losses in Asia, as solid manufacturing data helped ease concerns that the global economic recovery is faltering.
Britain's FTSE 100 index of leading British shares was up 16.63 points, or 0.3%, at 5 061.18 while Germany's DAX rose 7.78 points, or 0.1%, to 5 422.74. The CAC-40 in France was 4.36 points, or 0.1%, higher at 3 612.05.
Early jitters in Europe were eased by a survey showing that the manufacturing sector in the 16 countries that use the euro expanded in October for the first time in a year and a half.
The monthly purchasing managers index - a broad gauge of business activity - for the euro area rose to 50.7 from September's 49.3. Any reading above 50 indicates that the sector is growing.
A similarly encouraging picture emerged with equivalent British data. The PMI for October spiked to 53.7 from 49.9 in September. October's reading represented the fastest pace of growth since November 2007.
Though the manufacturing data helped stem the selling pressure in the markets that arose after Asia's big retreat in the wake of Friday's losses on Wall Street, investors will be looking to see if an equivalent survey from the Institute for Supply Management is equally rosy.
"With Wall Street eyeing a positive start, the onus will be on the likes of the US ISM manufacturing data to impress this afternoon if we're to avoid another turn around in sentiment," said Anthony Grech, market strategist at IG Index.
At the moment, there are hopes that the data will not disappoint and that US stocks will claw back some of the losses recorded on Friday when investors were spooked by government figures showing US personal spending in September fell 0.5% from the previous month.
Dow futures were up 58 points, or 0.6%, at 9 722 while the broader Standard & Poor's 500 futures rose 6.6 points, or 0.6%, to 1 039.60. On Friday, US stocks suffered their worst day since July.
The expected gains on Wall Street come despite news that commercial lender CIT Group has filed for Chapter 11 protection after struggling for months to avert bankruptcy. It was one of the biggest filings in US corporate history, following Lehman Brothers, Washington Mutual, WorldCom and General Motors.
Economic matters will be at the forefront of traders' attention this week. In particular, they will be looking to see what the US Federal Reserve, the European Central Bank and the Bank of England say about the world economy when they announce their latest interest rate decisions.
Though all three banks are expected to keep their benchmark rates at historic lows, investors will be focusing on what they say about economic prospects and when extraordinary measures to boost the world economy will start to be unwound. The Bank of England is the only one that may well change current policy, with most analysts now predicting that it will increase the amount of money it pumps into the economy.
And the week ends with the closely-watched US nonfarm payrolls report for October, which often sets the stock market tone for a week or two.
With all these big economic events ahead, Keith Bowman, an equities strategist at Hargreaves Lansdown in London, reckons that it could well end up being an "exceptionally volatile" week in stock markets.
- AP