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