LONDON – The euro hit a six-week high and shares rose on Monday as signs of quicker Chinese growth boosted investors' risk appetite although gains were capped by U.S. budget worries.
Activity in China's vast manufacturing sector sped up for the first time in 13 months in November, according to the latest Purchasing Managers' Surveys (PMI), adding to evidence the economy is reviving after seven quarters of slowing growth.
"We are in an environment where the big picture risks are still there; the U.S. fiscal cliff, the euro zone and China - on two of those (China and the euro zone) arguably things have been improving," Philip Poole, global head of macro investment strategy at HSBC Global Asset Management, said.
Final PMI readings for Europe due later are also likely to show a small rebound in November, although this will still mean the euro area is on course for its worst quarter since the depths of the global financial crisis in early 2009.
Uncertainty over whether Washington can avert the "fiscal cliff", $600 billion worth of tax increases and spending cuts that will be automatically triggered in early 2013 unless Democrats and Republicans agree how to cut the deficit, was also keeping investors nervous.
MSCI world equity index <.MIWD00000PUS> edged up about 0.1 percent 332.80 helped by a small gain in MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS>.
In Europe the FTSE Eurofirst 300 index <.FTEU3> of top European shares rose 0.2 percent in early trade to 1,121.87 points with London's FTSE 100 , Paris's CAC-40 and Frankfurt's DAX all around 0.2 percent higher.
The euro hit a six-week high against the dollar at $1.3048 on the upbeat Chinese data, before settling to be around $1.3030 ahead of the a euro zone finance ministers meeting which is due to assess the latest plan to help Greece.
The Greek government has unveiled details of a 10 billion euro bond buy-back crucial to cutting its ballooning debt pile, hoping the terms will draw enough investors and unblock aid.
The dollar was down 0.1 percent against the yen at 82.27, but not far from a 7-1/2-month high of 82.84 yen touched on November 22.
Oil prices were underpinned by the firm Chinese data, tensions in the Middle East.
U.S. crude futures rose 0.15 percent to $89.04 a barrel and Brent added 0.3 percent to $111.55, while London copper gained 0.2 percent to $8,010 a metric ton (1.1023 tons).
That uncertainty underpinned gold's appeal as a safe-haven as spot gold edged up 0.25 percent to $1,719 an ounce.
(Reporting by Richard Hubbard; Editing by Anna Willard)