GLOBAL MARKETS-Euro, stocks lifted by manufacturing data in U.S., Europe

Mon Dec 16, 2013 12:00pm EST

* German data help European shares bounce off 2-month lows
    * Investors still not clear whether Fed will taper this week
    * Euro inches higher vs dollar on euro zone data, Fed looms


    By Herbert Lash
    NEW YORK, Dec 16 (Reuters) - The euro rose against the
dollar on Monday on a surge in business activity in the euro
zone in December, while global equity markets were lifted by
U.S. manufacturing output and a strong rise in new orders in
Europe.
    American manufacturing output rose for a fourth straight
month in November as production increased almost across the
board, in the latest suggestion the U.S. economy is gaining
steam. 
    Production at U.S. factories advanced 0.6 percent last
month, building on October's 0.5 percent gain, the Federal
Reserve said.
    The manufacturing increase combined with a jump in mining
and utilities output to boost industrial production 1.1 percent,
the largest increase since November 2012, the Fed said.
    In Europe, Markit's Flash Eurozone Composite Purchasing
Managers' Index, a regional gauge of business activity across
thousands of companies large and small, rose to 52.1 in December
from 51.7 last month. 
    It was the second-highest reading since mid-2011 and beat a
median forecast in a Reuters poll for 51.9. The index has been
above the 50 mark that denotes growth the entire second half.
    New orders rose for the fifth month, suggesting the recovery
should continue into 2014.
    European shares rose more than 1 percent, while the Dow and
the Nasdaq also hit that benchmark before paring some gains.
    U.S. equities finished their worst week in nearly four
months last week, a pullback sparked by concerns the Fed may
begin to wind down its stimulus at a two-day meeting of
policy-makers that ends on Wednesday. 
    "It's the stronger economic data showing that tapering won't
have as dramatic an impact on the economy as first thought,"
said Alan Lancz, president, Alan B. Lancz & Associates Inc, an
investment advisory firm in Toledo, Ohio. 
    Lancz also said that money managers who had been sitting on
cash are putting their money into equities to show they haven't
missed the rally.
    MSCI's all-country world stock index rose
0.65 percent, while the FTSEurofirst 300 closed up 1.2
percent to a provisional 1,257.84.
    On Wall Street, the Dow Jones industrial average rose
140.65 points, or 0.89 percent, to 15,896.01, the S&P 500 
gained 12.81 points, or 0.72 percent, to 1,788.13 and the Nasdaq
Composite added 30.988 points, or 0.77 percent, to
4,031.963.
    The euro edged higher against the dollar on the euro zone
data showing business activity picked up, while uncertainty over
the Fed's bond-buying kept investors wary of the greenback. 
    Market participants have started to price in the possibility
of a small reduction in the Fed's bond purchases, resulting in a
stronger dollar trend last week.
    But Vassili Serebriakov, currency strategist at BNP Paribas
in New York, said much of the dollar buying had already taken
place last week. Fed policymakers meet Dec. 17-18.
    "There's no reason to buy the dollar ahead of the Fed
decision and so this is just position adjustment," Serebriakov 
said, adding that BNP expects the Fed to start scaling back its
asset purchases in March next year. 
    The euro rose to just shy of $1.38 on the Markit
report showing German manufacturing activity beating forecasts
in December. 
    The single currency had earlier dipped to around $1.3745
after separate data showed French private-sector activity
unexpectedly slowed.
    The euro was last at $1.3763.    
    Brent futures rose towards $111 a barrel on Monday. Supply
concerns revived after Libya failed to reach a deal with tribal
leaders to end the blockade of several oil-exporting ports.
    Brent crude for January rose $1.74 to $110.57, while
U.S. crude oil for January delivery rose 88 cents to
$97.48 per barrel.