SHANGHAI – Asian stocks mixed Wednesday, as a modest improvement in manufacturing data from China offered reassurance over its economic slowdown.

Benchmark oil hovered below $99 per barrel while the dollar rose against the euro and was steady against the yen.

A better-than-expected manufacturing index for January, issued by a government federation, fueled an early rally in most markets across the region. But much of the advance was lost after the later release of a competing, seasonally adjusted survey by HSBC that indicated conditions were still deteriorating.

Tokyo’s Nikkei 225 edged up less than 0.1 percent to close at 8,809.79. Hong Kong’s Hang Seng was down 0.4 percent to 20,314.21 while Seoul’s Kospi added 0.2 percent to 1,959.24.

By afternoon, shares in mainland China had retreated back into negative territory, with the benchmark Shanghai Composite Index shedding 1.2 percent to 2,265.49.

An unexpected drop in U.S. consumer confidence dragged stocks down overnight on Wall Street, where the Dow Jones industrial average lost 20.81 points, or 0.2 percent, to 12,632.91. The S&P slipped 0.60 point to 1,312.41 while the Nasdaq composite index rose 1.90 points to close at 2,813.84.

Overall, though, U.S. shares had their best start in 15 years, thanks to a modest improvement in the economy. Sentiment was further buoyed by hopes of progress in Europe after leaders there agreed on the broad outlines of a deal to tie the countries that use the euro closer together and on hopes that Greece is close to a debt-reduction deal with private creditors.

Yet, the mixed signals from China compounded uncertainties still weighing on investor confidence. That is true especially for Australia, whose economy depends heavily on Chinese demand for its coal and other commodities.

Australia’s S&P/ASX 200 fell 0.9 percent to 4,225.70 while India’s Sensex dropped 0.7 percent to 17,079.29.

Singapore shares also were lower, while Taiwan, Indonesia and New Zealand gained ground.

Benchmark oil for March delivery gained 15 cents to $98.63 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 30 cents to end at $98.48 per barrel in New York on Tuesday.

In currencies, the euro fell to $1.3038 from $1.3084 late Tuesday in New York. The dollar was nearly unchanged at 76.21 yen.

BANGKOK – Asian stocks edged higher Friday, setting aside weaker-than-expected U.S. home sales amid hopes for an agreement on debt relief for Greece and stronger growth in the world’s No. 1 economy

Japan’s Nikkei 225 index rose 0.4 percent to 8,885.09. South Korea’s Kospi added 0.3 percent to 1,963.82 and Australia’s S&P ASX 200 gained 1 percent to 4,312.40. Benchmarks in Singapore and New Zealand also rose, while Indonesia fell.

Sentiment was positive ahead of the release of fourth-quarter gross domestic product figures by the U.S. Commerce Department later Friday. GDP measures the economy’s total output of goods and services.

Economists predict growth will strengthen to around 3 percent in the October-December quarter from about 2 percent in the third quarter. Analysts at Credit Agricole CIB in Hong Kong said the reading was expected to “look healthy.”

The resumption of talks on a crucial Greek debt relief deal also heartened traders. Greece and its bailout rescuers — other countries that use the euro and the International Monetary Fund — are asking private creditors to swap their Greek bonds for new ones with a lower value and interest rate.

The two sides have disagreed over what interest rate the new bonds should take and the hope is they will find a compromise shortly. The creditors’ representatives have said they aim to get a deal by Monday, when European leaders meet in Brussels.

In the U.S., stocks slipped Thursday after the government reported an unexpected drop in new home sales in December, capping the worst year for home sales since record-keeping began in 1963.

The Dow Jones industrial average closed down 0.2 percent at 12,734.63. The Standard & Poor’s 500 index closed down 0.6 percent at 1,318.43. The Nasdaq shed 0.5 percent to close at 2,805.28.

But there were some bright spots. Orders to factories for long-lasting manufactured goods increased in December for the second straight month, and a key measure of business investment rose solidly.

Caterpillar Inc., the world’s biggest heavy equipment maker, rose 2.1 percent, the most of the 30 companies in the Dow, after beating analysts’ estimates last quarter. The company expects to do the same this year as global demand remains high.

That helped Asian industry counterparts. Japan’s Komatsu Ltd. rose 2.3 percent. Hitachi Construction Machinery Co. rose 0.8 percent.

Benchmark oil for March delivery was up 29 cents to $99.99 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 30 cents to finish at $99.70 per barrel on the Nymex on Thursday.

In currencies, the euro was unchanged from $1.3104 late Thursday in New York. The dollar fell to 77.40 yen from 77.49 yen.

PARIS – European leaders’ hard line in negotiations with Greek bondholders drove stock markets lower on Tuesday as investors worried that a deal necessary to cut Athens’ mountain of debt might fall through.

After 10 hours of talks on Monday, the finance ministers of the countries that use the euro announced that Greece would pay less than 4 percent interest on the new bonds creditors will get in a swap meant to cut Greece’s debt by about euro100 billion ($130 billion).

The deal is crucial to Greece’s and the eurozone’s stability since it’s clear there’s no way Athens can ever pay back all that it owes. Banks that hold Greek debt have already been asked to take a 50 percent loss on those investments — and some think even that writedown isn’t big enough.

The negotiations involve a delicate balancing act between getting a deal large enough to ensure that Greece can someday dig out from under its pile of debts but not so harmful to banks that it scares investors off from investing in any eurozone debt.

European leaders have promised Greece is a special case and bondholders won’t ever be asked to take losses again, but there are signs that investors are staying clear of the bonds of other vulnerable countries, like Portugal.

Time is running out for politicians and the banks to get it right — Greece has several billions of euros of debt coming due in March — and stocks dropped Tuesday amid worries they might not.

In France, the CAC-40 fell 0.8 percent to 3,312, while Germany’s DAX dropped 1 percent at 6,370. The FTSE index of leading British shares was down 0.7 percent to 5,740.

Wall Street was also set to open lower. Dow futures fell 0.3 percent at 12,609 and S&P futures dropped 0.4 percent to 1,305.

The euro fell 0.2 percent to $1.3000.

Politicians are also aware that European banks are under tremendous pressure because of the amount of government debt they hold and have seen their stock prices crash and their sources of funding dry up during the crisis. Late Monday, Standard & Poor’s downgraded the credit ratings of two major French banks, Credit Agricole and Societe Generale. They confirmed the rating of a third major bank, BNP Paribas, but the stock prices of all three plummeted Tuesday, underscoring how fragile all financial institutions are.

Compounding these concerns is the poor state of Europe’s economy and worries that the eurozone is slipping back into recession. Even relatively positive results from two economic surveys released Tuesday were not enough to ease those worries.

January’s manufacturing purchasing managers’ composite index rose to 48.7 from 46.9, according to Markit, a financial data company. The services PMI rose to 50.5 from 48.8. Both surveys, which are considered indicators for growth, beat the expectations of analysts, but experts warned they are far from good news.

“While the January purchasing managers’ surveys lift hopes that eurozone activity is stabilizing, they also suggest that the eurozone is far from out of the economic woods,” said Howard Archer, an analyst with IHS Global Insight. “Worrying elements remain in the purchasing managers’ surveys and we suspect that it is still more likely than not that the eurozone will suffer further contraction in the first quarter of 2012 which will put it back into recession.”

Concerns about the state of economy even tempered oil prices, which had been skyrocketing after European leaders announced they would stop buying Iranian oil in an effort to pressure Tehran into resuming talks on its nuclear program.

Benchmark oil fell back 30 cents to $99.28 in electronic trading on the New York Mercantile Exchange.

Earlier in Asia, Japan’s Nikkei 225 stock rose 0.2 percent to 8,785.33 despite the central bank cutting growth forecasts for the fiscal year ending March 2012 and the following year because of a slowdown in overseas demand and the strong yen.

Australia’s S&P/ASX 200 closed little changed at 4,224.20. Indonesia’s benchmark was up 0.1 percent at 3,994.91 and India’s Sensex was 1.5 percent higher at 16,997.35 after the Reserve Bank of India lowered cash reserve requirements for commercial lenders.

BANGKOK – Asian stock markets rose Friday amid signs that the U.S. economy was picking up steam, but European shares opened lower as nervous traders awaited results of crucial negotiations between debt-mired Greece and its lenders.

Benchmark oil hovered above $100 per barrel while the dollar rose against the euro and the yen.

European stocks fell in early trading. Britain’s FTSE 100 shed 0.1 percent to 5,733.14 and Germany’s DAX was 0.3 percent lower at 6,396.62. France’s CAC-40 lost 0.5 percent to 3,306.20. Wall Street also appeared set to open lower, with Dow Jones industrial futures down 0.2 percent to 12,567 and S&P 500 futures shedding 0.3 percent to 1,306.50.

Critical negotiations were under way in Athens between the government and private creditors over a debt restructuring. Greece cannot afford to repay its debts and is trying to persuade its creditors to accept losses of at least 50 percent on billions of euros (dollars) in Greek bonds.

Failure to seal a deal would likely result in a financially disastrous default by Greece.

“For the moment, the market expects a deal to be made while downside risk still exists and any disappointment could end the week of rallies,” Credit Agricole CIB in Hong Kong said in an email.

Signs out of the U.S. on Thursday indicating the U.S. economic recovery was on track powered Asian shares higher earlier in the day.

On the last trading day before Chinese New Year holidays begin Monday, the Shanghai Composite Index climbed 1 percent to 2,319.12. Japan’s Nikkei 225 index rose 1.5 percent to close at 8,766.36. Hong Kong’s Hang Seng added 0.8 percent to 20,110.37 and South Korea’s Kospi jumped 1.8 percent to 1,949.89.

Strong U.S. corporate earnings boosted investor risk tolerance. IBM Corp.’s fourth-quarter earnings beat Wall Street expectations, while Bank of America and Morgan Stanley both reported results that were better than analysts were expecting.

That helped lift shares in Japan’s major banks, including Mitsubishi UFJ Financial Group, which jumped 5.1 percent. Mizuho Financial Group was up 5.5 percent and Nomura Holdings surged 5.2 percent.

Another positive sign for the U.S. economy was data that showed a strengthening job market. The number of people seeking unemployment benefits fell last week to 352,000, the fewest since April 2008.

“The U.S. has better job figures and China’s central bank pumped money into the banking system to provide money to cash-starved enterprises so they can pay new year bonuses. I think after the Chinese New Year, be prepared for a correction,” said Francis Lun, managing director of Lyncean Holdings in Hong Kong.

Some Hong Kong-listed banks and insurers fell as investors sold shares to book profits ahead of the Lunar New Year, analysts said. The Industrial & Commercial Bank of China fell 1.1 percent. Ping An Insurance shed 0.8 percent.

Resources stocks advanced following strong gains in metals prices overnight.

Mining giant Rio Tinto Ltd. rose 1.2 percent. Fortescue Metals Group, Australia’s third-biggest iron ore producer, gained 2.6 percent.

Benchmark crude for February delivery was down 4 cents at $100.35 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 20 cents to finish at $100.39 per barrel in New York on Thursday.

In currency trading, the euro fell to $1.2932 from $1.2936 late Thursday in New York. The dollar rose to 77.21 yen from 77.17 yen.

BANGKOK – Asian stock markets rose Friday as strong earnings and positive jobs data out of the U.S. added to hopes that the economic recovery in the world’s largest economy is for real.

Japan’s Nikkei 225 index rose 1.2 percent to 8,744.15. South Korea’s Kospi rose 0.9 percent to 1,932.71. Hong Kong’s Hang Seng added 0.2 percent to 19,989.15 and Australia’s S&P/ASX 200 was 0.5 percent higher at 4,234.70.

Benchmarks in Singapore, New Zealand and mainland China were also higher. Taiwan markets were closed ahead of Chinese New Year, which starts Monday.

Strong corporate earnings reports in the U.S. boosted investor tolerance for risk assets like stocks. IBM Corp.’s fourth-quarter earnings also beat Wall Street expectations. Bank of America and Morgan Stanley both reported results that were better than analysts were expecting.

That helped lift shares in Japan’s major banks, including Mitsubishi UFJ Financial Group, which jumped 4.8 percent, and Mizuho Financial Group, up 4.6 percent. Nomura Holdings added 3.4 percent.

On top of earnings came data that showed the U.S. job market is strengthening. The number of people seeking unemployment benefits fell last week to 352,000, the fewest since April 2008.

Resources stocks advanced following strong gains in metals prices overnight.

Mining giant Rio Tinto Ltd. rose 0.8 percent. Fortescue Metals Group, Australia’s third-biggest iron ore producer, gained 1.2 percent.

Meanwhile, France and Spain held successful bond auctions, their first since Standard & Poor’s downgraded their credit ratings last week. The result was a sign that politicians and central bankers have at least temporarily stemmed the spread of Europe’s debt crisis.

Analysts warn, however, that a looming recession could hinder efforts to slash deficits while Greece depends on a deal with banks to avoid a disastrous default this spring. Closely watched debt-restructuring negotiations are taking place this week between Athens and private creditors. Failure to seal an agreement would likely result in a financially disastrous default by Greece.

“For the moment, the market expects a deal to be made while downside risk still exists and any disappointment could end the week of rallies,” Credit Agricole CIB in Hong Kong said in an email.

The Dow Jones industrial average gained 0.4 percent to close at 12,623.98. The Standard & Poor’s 500 index added 0.5 percent to close at 1,314.50. Both averages are at their highest since July. The Nasdaq added 0.7 percent to close at 2,788.33.

Benchmark crude for February delivery was down 4 cents at $100.35 a barrel in electronic trading on the New York Mercantile Exchange.

PARIS – The specter of Europe’s debt crisis returned Thursday after a brief respite, as bank stocks fell sharply on worries about losses on government debt and a French bond auction drew lackluster demand from investors.

Financial stocks slumped as it became clear banks would have trouble raising billions in new capital in coming months. In Italy, trading in UniCredit shares was halted after they lost a quarter of their value since yesterday morning, when the bank announced it had to offer huge discounts to investors to attract new capital.

The banks need the money to cover potential losses on government debt, whose value has plummeted across most of Europe in recent months on fear of defaults. Many countries in the region have to roll over billions in debt in coming months, putting huge focus on their bond auctions.

France raised euro7.96 billion ($10.31 billion) on Thursday, at the top of its goal, in an auction where demand was solid but far less than at the last sale in December. The borrowing rate for the 10-year bonds, which made up most of the auction amount, rose to 3.29 percent from 3.18 percent last time.

The sale also included 12-year, 24-year and 30-year bonds, and analyst Louise Cooper of BGC Partners said that just the fact that France was auctioning long-term debt indicated its position was fairly solid.

“When countries start to see their funding costs shoot up, then they issue short-term debt as this tends to be cheaper,” she said. “Long-term funding is a sign of confidence in a country.”

But she added that the demand level was “a little worrying, especially as France has a lot of debt to refinance this year.”

The country is under close scrutiny since ratings agencies warned they could strip it of its top AAA grade because of the impact of the crisis and a looming recession on its public finances. A downgrade would likely push France’s borrowing costs even higher.

France’s banks are burdened with huge amounts of government bonds from weak countries like Greece, and boosting them with state money could be expensive — and possibly trigger a downgrade for France.

Formerly routine affairs, European government bond auctions have become tense ordeals during the crisis. Countries that cannot raise money at reasonable rates must be rescued with bailout packages, and investors have grown concerned in recent months that even countries in the so-called European “core” could join that ignominious club. Thus far, only the relatively small economies of Greece, Ireland and Portugal have sought bailouts.

At the very least, if countries like France are forced to pay more to borrow money, they may become unwilling — or unable — to support their smaller neighbors.

After weeks of watching the bond yields of Italy, France and Spain rise, investors got a small respite this week. Germany and Portugal both sold bonds Wednesday at lower rates than previous auctions.

But France’s auction result was not quite as good, while Hungary — a non-euro member of the EU — saw its borrowing rates jump higher in a bond sale of its own. The country’s tense financial situation has deteriorated in recent weeks, pushing it to accept negotiations for a standby loan from the International Monetary Fund.

The bad news helped weaken sentiment in European markets, pushing the euro to $1.2798, a 15-month low against the dollar.

On the secondary market, where the issued bonds are later traded openly, the yield on 10-year bonds in Italy and Spain — both considered too big to bail out — were on the rise. Italy’s rose above the psychologically sensitive level of 7 percent, which is considered unsustainable in the longer term.

European financial stocks were hit hard as the debt worries resurfaced. To protect banks against losses on government bonds, European governments are forcing them to keep more safe capital on hand. But raising that money has proved tricky for some, since investors are reluctant to buy their stock or bonds.

Italy’s largest bank, UniCredit, announced Wednesday it would offer stock at a 69 percent discount to raise cash — a disturbing sign of just how pressed banks are.

More bad news came Thursday, when the Financial Times reported that Spain’s government thinks its banks will have to raise euro50 billion more than previously thought. That news sent Spanish bank stocks tumbling and contributed to losses in other countries. France’s Societe Generale SA was down 5 percent, for example.

The continued volatility in markets is another sign that investors don’t put much stock in the “solutions” unveiled at a summit last month that committed governments to a new treaty that would give European bureaucrats substantial oversight of their budgets.

Leaders hoped to reassure markets that overspending would never again threaten state solvency, but investors have noted that it does nothing to solve the immediate crisis — the heart of which is rising bond yields — and is unlikely to ever be enacted as strongly as it was conceived anyway.

Instead, they want the European Central Bank step in more forcefully to drive down borrowing costs by buying bonds in the open market, a practice it engages in only modestly right now. Analysts argue that would give governments time to enact longer-term solutions, like restoring credibility in their spending habits and allowing them to invest in growth. For now, governments can only slash spending to woo markets, but that also cripples already anemic growth and threatens to usher in a new recession.

Despite these challenges, French Prime Minister Francois Fillon promised on Thursday that France would invest in growth, by reducing the taxes companies pay on salaries, in the hopes of driving down the unemployment rate, which stands at 9.7 percent ahead of presidential elections this spring.

Fillon said France would cut debt with a new sales tax and by taxing financial transactions.

The latter is controversial since many have argued it will only work if applied across the European Union or even the world. Britain and the U.S. — both of which are major centers of finance — have strongly resisted it.

Fillon vowed France would push ahead.

“It’s normal that all sectors participate in a collective effort, including the financial sector,” he said.

SHARES RISE: Stocks were barely changed Tuesday on mixed economic news and light trading. The Dow Jones industrial average fell 2.65 points to 12,291.

CONSUMERS VS REAL ESTATE: Consumer confidence surged to an eight-month high, but home prices dropped in major cities. Home prices fell in 19 of the 20 cities tracked by the Standard & Poor’s/Case-Shiller index. The Conference Board’s Consumer Confidence Index soared near a post-recession peak.

SEARS HURTS: Sears plunged 27 percent to $33.38, the most in the S&P 500. The retailer said it would close between 100 and 120 Sears and Kmart stores following poor sales during the holidays.

BRUSSELS (Reuters) – Deutsche Boerse and NYSE Euronext have stepped up their lobbying with an advertising campaign to pressure EU regulators and secure approval for their $9 billion merger.

In what some antitrust lawyers said was an unprecedented move for a competition case, the exchanges took out full-page adverts in seven newspapers in Britain, Germany, France, the Netherlands, Belgium and Portugal on Tuesday, touting the merits of the deal for Europe's financial sector.

The advert, signed by 30 academics and top executives from companies such as French oil major Total and French reinsurer SCOR, appeared amid continuing EU regulatory concerns and criticism from rivals and some users over the deal.

The European Commission is concerned about the combined entity's more than 90 percent share of the exchange-based derivatives trading in Europe and whether new players would be able to enter the market after the merger.

The exchanges will need to be careful not to be too heavy-handed in their lobbying, said experts.

"When appropriately done, lobbying can be effective but too heavy lobbying can be counter-productive. To be effective, it has to be extremely focused, touch the right button and has the right message," said Bernard Amory, a partner at law firm Jones Day.

Microsoft, for example, which marshalled an army of lobbyists in its decade-long battle with the European Commission, was hit with total fines of 899 million euros ($1.17 billion) — a record at that time — for breaching EU antitrust rules.

Nicolas Petit, a professor at the University of Liege Law School, said that lobbying had to be carefully targeted to be effective.

"In general, lobbying has little influence but in exceptionally important cases and where the lobbying is directly targeted at distinct teams within the competition directorate, it may have some influence and may create internal conflicts," Petit said.

"In one antitrust case for instance, rumor has it that the chief economist team did not support the theories advanced by the case team. The case was eventually dropped."

Playing to national interests could result in a favorable outcome, said Christopher Kummer, head of think tank the Institute of Mergers, Acquisitions and Alliances.

"I do believe that talking to the right political influencer's might make a difference which means taking it to a very high level," he said. "If I would want to get this deal done – very, very national senior support is needed."

The exchanges have chosen four top-notch lobbyists to make their case. Fipra, whose advisers are usually former government officials and industrial specialists, is tasked with winning support from national competition regulators for the deal.

G+ Europe, which has a blue-chip client list, and FTI Consulting deals with the press. A fourth firm, cabinet DN, lobbies EU lawmakers on securities regulation issues.

($1 = 0.7694 euros)

(Reporting by Foo Yun Chee; Editing by Elaine Hardcastle)

LONDON – Global stocks were muted on Friday as concerns about Europe’s debt crisis flared back up, with Fitch ratings agency warning it could downgrade six eurozone nations, including Italy and Spain, two of the shakiest economies in the region.

Although Fitch affirmed France’s top AAA rating, it announced it was considering downgrading Italy, Spain, Ireland, Belgium, Slovenia and Cyprus.

It said that following last week’s EU summit, it “has concluded that a ‘comprehensive solution’ to the eurozone crisis is technically and politically beyond reach.”

The warnings came at the end of a day full of negative news for Europe. Ireland’s economy contracted much more than expected in the third quarter, Spanish regional debt rose sharply over the past year, and EU officials admitted that talks to get Greece’s private creditors to take losses on their bonds were not going as well as hoped.

The affirmation of France’s rating and the Italian government’s survival of a confidence vote were rare bright spots in a week of dire financial news for Europe.

After trading higher most of the day, European stocks closed lower. Britain’s FTSE shed 0.3 percent to 5,387.34 and Germany’s DAX lost 0.5 percent to 5,701.78.

France’s CAC-40 closed 0.9 percent lower at 2,972.30 — its losses were driven in part by a report from the national statistics agency predicting a recession in the country over this quarter and the next. Fitch’s affirmation of the country’s rating came only after markets closed.

Investor sentiment had been stronger earlier in the day, as traders focused on an improvement in U.S. economic indicators.

This week, U.S. government data showed the number of people applying for unemployment benefits last week was at its lowest since May 2008. That’s a sign that layoffs are easing, a first step toward bringing down the unemployment rate, which currently stands at 8.6 percent.

Traders were also encouraged by a report from the Federal Reserve of New York that its index measuring regional manufacturing jumped to the highest level since May. That was far more than economists were expecting. A similar report from the Philadelphia branch of the Fed also increased more than analysts anticipated.

Early gains in Wall Street were trimmed by the concerns in Europe. The Dow Jones industrial average dipped 0.2 percent to 11,848.15, while the S&P 500 gained 0.1 percent to 1,217.24.

The euro was steady at $1.3013, as was the dollar against the Japanese yen, at 77.85 yen.

In Asia, Japan’s Nikkei 225 index closed 0.3 percent higher at 8,401.72. South Korea’s Kospi rose 1.2 percent to 1,839.96 and Hong Kong’s Hang Seng added 1.4 percent to 18,285.39. Benchmarks in Singapore, Taiwan and Indonesia also rose.

Mainland China shares ended a six-session losing streak, with the benchmark Shanghai Composite Index gaining 2 percent to close at 2,224.84.

Analysts stopped short of calling the gains a recovery, as trading was light ahead of the holidays.

Signs emerged that the Chinese central bank may have intervened in the currency market by offering dollars to support the Chinese yuan, which has been weakening in recent sessions. That raised speculation that authorities may plan more market-boosting measures.

The yuan strengthened to a record 6.3294 against the U.S. dollar, but later eased to 6.3446. Weakness in the yuan could raise tensions with countries such as the U.S. that complain it is already undervalued.

Benchmark oil for January delivery was up 26 cents to $94.13 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.08 to finish at $93.87 per barrel on Nymex on Thursday.

___

Pamela Sampson in Bangkok and Elaine Kurtenbach in Shanghai contributed to this report.

BANGKOK – Asian stocks fell Thursday as Japanese business confidence and Chinese manufacturing both slipped, but European shares rose as data showing the region’s economic output contracted less than anticipated.

Benchmark oil rose to near $96 per barrel after a big slide the day before while the dollar rose against the euro but fell against the yen.

Stock markets headed higher in early European trading. Britain’s FTSE 100 rose 0.7 percent to 5,404.36. Germany’s DAX jumped 1.1 percent to 5,734.83 and France’s CAC-40 added 0.9 percent to 3,001.80.

Wall Street was headed for a higher opening, with Dow Jones industrial futures rising marginally to 11,770 and S&P 500 futures gaining slightly to 1,207.20.

The purchasing managers’ index published by financial data company Markit showed eurozone manufacturing and services output contracting for a fourth month in December, although at the slowest rate since September. The composite output index stood at 47.9 in December, up from 47.0 in November.

“The December Eurozone purchasing managers surveys are better than feared and show welcome, much-needed improvement. However, the likelihood remains that Eurozone GDP will contract in the fourth quarter, even if the decline may not be as has been feared,” said Howard Archer of IHS Global Insight in a report.

But stocks faced strong headwinds earlier in Asia as business confidence fell in Japan and Chinese manufacturing data showed a contraction, although at a slower rate.

Japan’s Nikkei 225 index shed 1.7 percent to close at 8,377.37, a three-week low. South Korea’s Kospi lost 2.1 percent to 1,819.11 and Hong Kong’s Hang Seng tumbled 1.8 percent to 18,026.84.

Mainland Chinese shares lost ground for a sixth straight trading day, with the benchmark Shanghai Composite Index falling 2.1 percent to 2,180.90, while the Shenzhen Composite Index lost 2.3 percent to 886.01.

In Japan, confidence at major manufacturers fell over the last quarter. The Bank of Japan’s “tankan” survey of business sentiment fell to minus 4.

The figure represents the percentage of companies saying business conditions are good minus those saying conditions are unfavorable, with 100 representing the best mood and minus 100 the worst.

Japan’s strong yen has hit multiple historic highs this year against the dollar, making business conditions difficult for Japan’s export-reliant economy.

Meanwhile, preliminary manufacturing figures showed that Chinese factory output contracted, but at a slower rate, in December. HSBC’s purchasing manager’s index for December stood at 49.0, up from 47.7 in November. Any number below 50 indicates a contraction in manufacturing activity.

But the figure didn’t raise hopes that China might ease its monetary policy anytime soon.

“I don’t think there will be an interest rate cut in the short-term,” said Dickie Wong, executive director of research at Kingston Securities Ltd. in Hong Kong. “Sentiment is really bad in China.”

On Wall Street, stocks plummeted Wednesday amid a growing sense that Europe’s leaders have failed to contain that region’s debt crisis.

Since European leaders reached an agreement to rein in future government budget deficits last week, investors and credit rating agencies have criticized the deal for failing to address current problems.

Italy had to pay higher borrowing rates in its last bond auction of the year Wednesday. The third-largest economy among the 17 nations the use the euro paid 6.47 percent interest to borrow 3 billion euros ($3.95 billion) for five years — up 0.17 percentage point from last comparable auction — and the highest rate since the euro came into existence in 1999.

The higher rates make it more expensive for Italy to borrow money and reflect rising doubts that the country will be able to repay its debts.

Oil prices, which plunged more than $5 on Wednesday, drove down energy-related shares. South Korea’s S-Oil Corp. fell 4.7 percent. Hong Kong-listed China National Offshore Oil Corp. dropped 4.6 percent.

Asian banking shares fell on the heels of a downgrade by Fitch Ratings of five major European commercial banks and cooperative banking groups. Hong Kong-listed Industrial & Commercial Bank of China, the world’s largest bank by market value, fell 2.6 percent. Australia’s Westpac Banking Corp. fell 1.8 percent.

The Dow Jones industrial average fell 1.1 percent to close at 11,823.48 on Wednesday. The Standard & Poor’s 500 index fell 1.1 percent to 1,211.82. The Nasdaq fell 1.6 percent to 2,539.31.

Benchmark oil for January delivery was up 76 cents at $95.71 a barrel in electronic trading on the New York Mercantile Exchange. The contract declined $5.19 to finish at $94.95 per barrel on the Nymex.

In currency trading, the euro slipped to $1.2975 from $1.2977 late Wednesday in New York. The dollar slipped to 77.92 yen from 78.07 yen.