* Euro zone recovery boosted by growth in France, Germany
* U.S. stocks climb, despite soft data on factory output
* Gold rises to three-month highs above $1,300
By Caroline Valetkevitch
NEW YORK, Feb 14 World stocks climbed for an eighth straight session on Friday on signs of a gradual improvement in euro zone growth, and the euro rose to its highest level in almost three weeks, while gold rose above $1,300 an ounce.
Wall Street stocks posted gains for a second straight week, despite more weak data on the U.S. economy. Investors again appeared to blame the data on bad weather. The Nasdaq rose for a seventh session in a row, closing at its highest level since 2000.
U.S. factory production fell 0.8 percent in January, the biggest drop in more than 4-1/2 years. The report from the Federal Reserve follows an unexpectedly weak U.S. retail sales report Thursday that stock investors also discounted because of the weather.
"While weather is often used as an excuse to get a more favorable slant on things, half the (United States) has felt a real impact, which is enough that equity markets can look at the data and not worry about it," said Jeff Morris, head of U.S. equities at Standard Life Investments in Boston.
Investors also gave a cautious thumbs up to political changes in Italy.
Italy's center-left leader, Matteo Renzi, forced out Prime Minister Enrico Letta on Thursday after Letta failed to pass major reforms. The new government will be Italy's third in a year, but the hope is that Renzi can revive efforts to streamline the euro zone's third-largest economy .
The MSCI global stock index climbed 0.5 percent, for a total gain of 5 percent over the last eight sessions, its best eight-day performance in four months. Stocks in Milan were Europe's best performers, rising 1.6 percent, while the pan-European FTSEurofirst 300 index gained 0.5 percent on the day.
Fourth-quarter growth in gross domestic product in both Germany and France exceeded expectations, helping drive GDP for the euro zone up 0.3 percent, beating the forecast for 0.2 percent growth. Germany and France are the euro zone's two largest economies.
On Wall Street, the Dow Jones industrial average rose 126.8 points, or 0.79 percent, to 16,154.39; the S&P 500 gained 8.8 points, or 0.48 percent, to 1,838.63; and the Nasdaq Composite added 3.354 points, or 0.08 percent, to 4,244.025.
Other data showed U.S. export prices rose 0.2 percent in January, the third straight monthly increase in a potentially positive sign for global economic demand and the outlook for American manufacturers.
In the currency market, the euro rose as high as $1.3715 . The dollar index, which measures the dollar against six major currencies, slid to a low of 80.065, its 2014 bottom so far, and was last at 80.199, down 0.16 percent.
The euro zone data is likely to help reduce expectations that the European Central Bank will cut interest rates at next month's meeting, after ECB President Mario Draghi last week declared more information was needed before deciding on any action.
WEAKER DOLLAR LIFTS GOLD
Gold rose to a three-month high above $1,300, gaining 1 percent and notching its biggest weekly gain in six months, as weakness in the dollar lifted bullion's currency-hedge appeal.
Spot gold was up 1.2 percent at $1,317.90 an ounce, after rising to its highest since Nov. 7 at $1,320.90. It was up around 4 percent for the week, the largest such gain since mid-August.
In the bond markets, U.S. Treasury debt yields edged higher after losses in the previous session.
Benchmark 10-year Treasuries were down 3/32 in price to yield 2.74 percent, up from 2.73 percent late on Thursday. Yields rose for a second straight week.
Helping to lift yields this week was THE U.S. Congress's approval of an increase in the debt limit and comments from Federal Reserve Chair Janet Yellen, in her first public remarks since taking the Fed's helm, maintaining the central bank's commitment to gradually withdraw its stimulus.
But the uptrend could unravel as the recent run of weaker-than-expected economic data has raised doubts about the stability of the U.S. recovery.
"We have been having this kind of drum beat of slightly weaker data, and what this is doing is that it's starting to convince some parts of the market that the recovery is not as solid as the Fed would like us to believe," said Aaron Kohli, interest rate strategist at BNP Paribas in New York.
In the energy market, Brent oil futures rose, boosted by demand for heating oil ahead of more cold weather and snow in the U.S. Northeast as well as supply disruptions in producers Libya and Angola.
Brent crude settled 56 cents higher at $109.08 a barrel, while U.S. crude slipped 5 cents to settle at $100.30, though it ended higher on the week for the fifth week in a row.