European Stocks up on Manufacturing Optimism

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.

A man walks past an electronic stock indicator in central Tokyo Monday, Nov. 2, 2009. Japan's benchmark Nikkei stock average shed 272.08 points, or 2.71 percent, from Friday to 9,762.66, to wrap up the morning session. (AP Photo/Koji Sasahara)

(AP)

Britain's FTSE 100 index of leading British shares was up 16.63 points, or 0.3 percent, at 5,061.18 while Germany's DAX rose 7.78 points, or 0.1 percent, to 5,422.74. The CAC-40 in France was 4.36 points, or 0.1 percent, 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 U.S. 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 U.S. stocks will claw back some of the losses recorded on Friday when investors were spooked by government figures showing U.S. personal spending in September fell 0.5 percent from the previous month.

Dow futures were up 58 points, or 0.6 percent, at 9,722 while the broader Standard & Poor's 500 futures rose 6.6 points, or 0.6 percent, to 1,039.60. On Friday, U.S. stocks suffered their worst day since July.