NEW YORK – For the past six weeks, Wall Street traders have optimistically pushed the Dow Jones industrial average up nearly 4.8 percent on a belief that the U.S. economic recovery is finally gaining momentum.

On Monday, that cheerfulness will be put to the test as investors balance good news at home with lingering fears over the stability of Europe.

After three days of rioting, the Greek parliament early Monday morning approved a new set of austerity measures that are likely to cause much pain for its already-struggling citizens. The measures clear the way for the nation to reduce its debt and are a crucial step needed for the country to gain another bailout from the other European nations and the International Monetary Fund.

As a new week of trading starts, investors are worried that things in Europe can still unravel given the Greek’s history of reneging on promises of fiscal responsibility. And the recent optimism over the U.S. recovery is still fragile enough to be undone by just a few bad economic indicators.

Traders’ jitters were evident Friday after Greeks took to the streets in protest of the then proposed cuts including a 22-percent drop in the minimum wage and the elimination of one in five civil service jobs. This comes with the unemployment rate over 20 percent and the economy in the fifth year of a recession. Riots and fires continued all throughout the weekend.

The unrest and calls from some European officials for even stricter austerity measures caused widespread selling by investors Friday. The Dow closed down 89 points, or 0.7 percent. It was the worst day of the year for the market.

Even as the measures pass, Wall Street must still ask itself if the worst of Europe’s troubles are over or if the crisis has just been temporarily delayed. Attention now shifts to a meeting Wednesday of European finance ministers, who will discuss additional bailout funds for Greece.

“Fear is going to be back this week,” said Jeffrey Sica, president of Sica Wealth Management. “It’s going to be a very, very volatile choppy week primarily because no matter how this turns out, there’s going to be this aspect of skepticism that’s going to keep investors very quick to sell.”

Sica said a yes vote means a quick boost for the market before investors remember that Greece has voted for such measures in the past and continually broken its promises to make painful cuts. In his view, this year’s rally isn’t the result of overwhelming confidence. It’s because a fear of Europe’s problems has led investors to U.S. stocks which are safe by comparison.

“The heart of the issue is the rest of Europe — and the next domino to fall — which is Italy,” he added. “You can ignore one small country, but you can’t ignore (the European Union), the second-largest economy in the world.”

Barry Knapp, head of U.S. equity portfolio strategy at Barclays Capital, also isn’t optimistic about this week but not because of Greece. Knapp said that if any bit of U.S. economic data disappoints, even slightly, the reaction on Wall Street will be bad.

Retail sales and industrial production data along with speeches from members of the Federal Reserve will likely be market movers this week.

“I think we’re in a spot now where the market is just much more prone to disappointment,” he said. “The market doesn’t have much margin for error right now.”

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Scott Mayerowitz can be reached at http://twitter.com/GlobeTrotScott.

Investors coasted Thursday while they waited for a critical government report on jobs. Stocks were mostly flat, a pause from their strong start this year, and bonds didn’t move much, either.

The Labor Department said the four-week average of unemployment claims fell to 375,750, the lowest since June 2008 and enough to suggest a steadily improving job market.

The more important numbers come Friday, when the government releases the number of jobs created in January and the unemployment rate. In December, the country added 200,000 jobs, and the rate was 8.5 percent.

A day ahead of the report, the Dow Jones industrial average was down 10 points at 12,707. The broader Standard & Poor’s 500 index rose one point to 1,325. The Nasdaq composite rose 10 points to 2,858.

The Dow traded in a narrow range — between a gain of 25 points and a loss of 40.

Bond traders stayed on the sidelines, too. The price of the benchmark 10-year Treasury note rose 6.2 cents for every $100 invested, and the yield inched down to 1.82 percent from 1.83 percent Wednesday.

Most industries in the stock market rose, albeit slightly. A 0.6 percent gain was all it took to make energy stocks the biggest-gaining category in the S&P.

U.S. mining stocks rose after British mining company Xstrata PLC confirmed it is in merger discussions with commodities trader Glencore International PLC. In the U.S., Newmont Mining Corp. rose 1.5 percent, Alcoa was up 2 percent, and iron ore and coal miner Cliffs Natural Resources Inc. rose 1 percent.

The deal is a signal to investors that mining companies are trading at low prices compared with the commodities they mine, said Nathan Rowader, director of investments at Forward Management in San Francisco.

Health care stocks fell almost 1 percent. Cigna dropped 4 percent after its earnings fell short of expectations as it absorbed higher corporate and medical costs. Pfizer fell 1.1 percent after recalling birth-control pills.

Retailers were a patchwork of rising and falling stock, reflecting their patchwork of January sales results. Costco and Target came in better than expected. Macy’s and Dillard’s fell short. Costco rose 2.5 percent, and Target rose 0.6 percent.

Gap rose 10 percent after revenue at its high-end Banana Republic stores rose 6 percent.

Abercrombie & Fitch Co. fell 11 percent to a one-year low after it said higher markdowns and cotton costs mean its adjusted fourth-quarter profit and revenue will be less than analysts had expected.

Last year, investors were so worried about a financial disaster in Europe that U.S. companies with strong earnings have been undervalued, said Tim Courtney, chief investment officer of Burns Advisory Group in Oklahoma City.

Now, he said, stock prices are catching up. The S&P is up 5.4 percent this year, the Dow 4 percent.

“Right now the market is going up just on the absence of bad news, on the absence of that worst-case scenario materializing,” he said.

Stocks in Europe closed nearly flat or up slightly. Britain’s FTSE 100 index rose 0.1 percent. Germany’s DAX was 0.6 percent higher, and the CAC-40 in France rose 0.3 percent.

The euro was also subdued after recent gains, trading slightly lower at $1.315.

In other corporate news:

• Green Mountain Coffee Roasters Inc., which makes Keurig cup coffee brewers, rose a hot 22 percent after it said first-quarter revenue more than doubled, margins tripled, and net income rose more than 40-fold.

• MasterCard rose almost 6 percent after adjusted profits beat Wall Street expectations.

BANGKOK – Asian stock markets fell Monday, with slower-than-expected growth in the U.S. and uncertainty about a tentative deal to resolve Greece’s debt crisis weighing on investor sentiment.

Japan’s Nikkei 225 index fell 0.7 percent to 8,781.92. South Korea’s Kospi was 0.7 percent lower at 1,951.23 and Hong Kong’s Hang Seng dropped 0.5 percent to 10,394.33. Australia’s S&P/ASX 200 lost 0.3 percent at 4,274.70.

Benchmarks in Singapore and the Philippines also fell. Shares in mainland China were mixed after being closed for a week for Chinese New Year holidays. Taiwan and New Zealand rose.

European leaders were to meet later Monday in Brussels to discuss austerity and belt-tightening measures as well as a tentative deal reached Saturday between Greece and its private investors that could avert a disastrous Greek default on its debt.

If the deal holds and works, it will help prevent a potential shock to the world banking system. But it doesn’t resolve the weakening economic conditions in Greece and other European nations as they rein in spending to get their debts under control.

Stan Shamu of IG Markets in Melbourne said that “the Greece debt issues will remain a source of uncertainty and might dampen the risk mood ahead of the EU summit today.”

Under the agreement, investors holding 206 billion euros ($272 billion) in Greek bonds would exchange them for bonds with half the face value. The replacement bonds would have a longer maturity and pay a lower interest rate.

The deal would reduce Greece’s annual interest expense from about 10 billion euros to about 4 billion euros. When the bonds mature, Greece would have to pay its bondholders only 103 billion euro.

It is unclear how investors who buy and sell the bonds of other debt-burdened countries, such as Italy, Spain and Portugal, will react. If they drive up borrowing costs for those countries, the debt crisis could get worse.

Private investors hold two-thirds of Greece’s debt, which is equal to an unsustainable 160 percent of its annual economic output. By restructuring the debt, Greece hopes to make it a more manageable 120 percent by decade’s end.

On Wall Street, stocks mostly fell Friday after the government said the U.S. economy grew more slowly than expected in the last three months of 2011.

Economic growth for October through December came in at an annual rate of 2.8 percent. That was the fastest of 2011 but lower than the 3 percent that economists were looking for.

The Dow Jones industrial average fell 0.6 percent to 12,660.46. The Standard & Poor’s 500 index fell 0.2 percent to 1,316.33. The Nasdaq composite rose 0.4 percent to 2,816.55.

Benchmark oil for March delivery was down 36 cents to $99.20 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 14 cents to end at $99.56 per barrel on the Nymex on Friday.

In currencies, the euro fell to $1.3180 from $1.3208 late Friday in New York. The dollar rose slightly to 76.74 yen from 76.72 yen.

NEW YORK – Stocks were mostly lower Friday after the government reported the U.S. economy grew at a slower pace than economists had expected in the fourth quarter.

The Dow Jones industrial average fell 59 points, or 0.5 percent, to 12,676 in the first hour of trading. The S&P 500 index fell 2 points to 1,317. The Nasdaq composite edged up 6 to 2,811.

The Commerce Department said the economy grew at a modest 2.8 percent in the final three months of last year. Economists had expected 3 percent growth.

Among stocks making big moves, Chevron Corp. fell 3 percent, the most of the 30 stocks in the Dow average, after the energy company’s fourth-quarter revenue and earnings per share came in well below what analysts were expecting. Oil and natural gas production declined in the quarter.

Ford Motor Co. fell 4.5 percent after reporting disappointing fourth quarter earnings due weak sales in Europe. The company said its results were also hurt by trouble at parts suppliers in Thailand due to flooding there.

Starbucks Corp. fell 2.7 percent after reporting late Thursday that that full year results were likely to come in less than expectations. Procter & Gamble Co., which makes Tide, Crest and other consumer products, fell less than 1 percent after cutting its earnings outlook.

Legg Mason fell 6 percent after the investment management company’s earnings fell in half as clients pulled money out of the firm. Legg Mason’s earnings of 20 cents per share were well below the 25 cents per share that analysts were expecting, according to FactSet.

NEW YORK – U.S. stock futures are higher after a report showed strong growth in China.

Futures for the Dow Jones industrial average were up 0.9 percent at 12,497. The broader Standard & Poor’s 500 futures rose 0.9 percent to 1,300. The Nasdaq composite increased 1 percent at 2,397. The market was closed Monday for Martin Luther King Jr. Day.

Government figures showed that the slowdown in Chinese growth in the final quarter of 2011 was smaller than feared. Though growth of 8.9 percent represented the lowest rate in two and a half years, the markets had been expecting a bigger decline to 8.7 percent.

China is needed to shore up the global economy, especially when many investors are openly fretting about a Greek debt default that could prompt further market turmoil.

The data boosted Asian and European markets. Germany’s DAX was up 1.9 percent at 6,338 while the CAC-40 in France rose 1.6 percent to 3,275. The FTSE 100 index of leading British shares was 1.2 percent higher at 5,723.

The rebound in sentiment could also be seen in other markets, with the euro up 0.9 percent at $1.2790 and oil prices back above $100 a barrel. Both assets often get supported when investors have a predilection to take on riskier assets.

The euro has foundered in recent days and weeks on rising concerns of a recession in the 17-nation eurozone and renewed speculation that Greece will default on its debts.

Greece remains the epicenter of the European debt crisis and is struggling to agree to a deal with its private creditors to get them to reduce the value of their holdings of Greek debt.

Last October, Greece’s partners in the eurozone sanctioned a deal whereby Greece’s creditors agree to take a cut in the value of their Greek bond holdings to help lighten the country’s debt burden.

The deal with private investors, known as the Private Sector Involvement, or PSI, aims to reduce Greece’s debt by euro100 billion ($127.9 billion) by swapping private creditors’ bonds for new ones with a lower value. It is a key part of a euro130 billion international bailout, the second one for Greece.

It is expected that talks on the PSI will resume on Wednesday after being abandoned last Friday.

On Tuesday, representatives of Greece’s creditors — the European Union, the European Central Bank and the International Monetary Fund — will visit Greece for yet another round of inspections of its efforts at fiscal and structural reform and negotiations for the next tranche, the seventh, from the first bailout.

Without a deal with its private creditors, Greece has been told it won’t get the next tranche of money due from its first bailout.

Without that money, Greece would be unable to pay a big bond redemption in March, potentially triggering mayhem in financial markets.

Earlier in Asia, sentiment was supported by the Chinese growth figures.

In China, the benchmark Shanghai Composite Index jumped 4.2 percent, the most in over two years, closing at 2,298.38. The Shenzhen Composite Index of China’s second, smaller exchange surged 5.1 percent to 860.25.

Hong Kong’s Hang Seng soared 3.2 percent at 19,627.75 while Japan’s Nikkei 225 index rose 1.1 percent to close at 8,466.40.

NEW YORK (Reuters) – Wall Street stocks resumed their upward move into year-end on Thursday but the S&P 500 continued to churn around its 200-day moving average as concern over Europe offset better-than-expected U.S. economic data.

The gains nudged the S&P 500 back into positive territory ahead of the last trading day of the year.

Italian bond yields, which helped break a five-day rally with a sharp selloff in the last session, eased Thursday after a debt auction. But the yield on 10-year bonds hovered near 7 percent, a level markets see as a danger zone for Italian government finances.

Pending sales of existing U.S. homes surged to a 1-1/2 year high in November, offering more signs of a tentative housing recovery. The report sent the Dow Jones home builders index (.DJUSHB) up 3.5 percent.

In addition, factory activity continued to grow in the U.S. Midwest in December, as purchasing managers reported rising prices and employment, even though production eased slightly.

"That is not a bad way to end the year – incrementally positive data," said Fred Dickson, chief market strategist at D.A. Davidson & Co in Lake Oswego, Oregon. "The market still looks like it wants to drift a little bit higher."

Stocks added to gains after the euro erased losses against the dollar, rebounding from a 15-month low in thin trading.

The Dow Jones industrial average (.DJI) gained 101.83 points, or 0.84 percent, to 12,253.24. The Standard & Poor's 500 Index (.SPX) rose 9.93 points, or 0.79 percent, to 1,259.57. The Nasdaq Composite Index (.IXIC) added 17.00 points, or 0.66 percent, to 2,606.98.

Banks were the biggest gainers along with commodity-related sectors that sold off hard on Wednesday. The S&P financial index (.GSPF) rose 1.4 percent, while the capital goods sector (.GSPIC) was up 1 percent.

Concerns over Europe's sovereign debt crisis resurfaced Wednesday, sparking a 1 percent decline in major indexes. The S&P 500's slim gains for the year were erased and the index pulled back below its 200-day moving average.

The 200-day moving average has been a critical level for the S&P 500 this year as investors look for a significant break above that level before committing capital. The measure is often used to gauge the market's longer-term strength.

On the down side, initial claims for jobless benefits rose more than expected, giving a mixed labor picture, but investors said the trend was still lower.

Recent economic data, including reports on housing, have been largely positive, contributing to gains over the past month and the view that economic growth is picking up steam.

"We have seen a pretty encouraging trend in the U.S. economic data over the last two months," said Peter Jankovskis, co-chief investment officer at OakBrook Investments in Lisle, Illinois. "If that trend continues that will provide good support and perhaps some upward momentum."

The next big test for markets in terms of U.S. economic data will be the December payrolls report next week.

For the year, the S&P is up 0.1 percent while the Nasdaq is down 1.7 percent and the Dow is up 5.8 percent.

Gains on the Nasdaq were limited by Amazon.com Inc (AMZN.O), which fell 0.3 percent to $173.40. Goldman Sachs said the online retailer's sales growth in the current holiday quarter could miss expectations.

Diamond Foods Inc (DMND.O) shares rose 7.8 percent to $31.69 after CNBC reported rumors that high-profile investor David Einhorn may have invested in the company.

Mosaic Co (MOS.N) was off 1.1 percent to $49.73 after the fertilizer producer said it will cut production of phosphate, a key nutrient used for crop production, because prices have fallen to unsustainable levels.

Standard & Poor's placed Sears Holdings Corp's (SHLD.O) credit rating on review for a possible downgrade. It said plans to close at least 100 stores may not do much to improve its performance. The stock fell 1.5 percent to $32.80 and has lost one-third of its value over the last three days.

(Reporting By Edward Krudy; editing by Jeffrey Benkoe)

BANGKOK – Asian stocks markets fell Wednesday, with trading thinned by year-end holidays and mixed economic news out of the U.S. and Japan.

Japan’s Nikkei 225 index fell marginally to 8,436.24. Hong Kong’s Hang Seng fell 0.6 percent to 18,510.73, while South Korea’s Kospi lost 1 percent to 1,824.59. Australia’s S&P ASX 200 lost 1.2 percent to 4,089. Benchmarks in mainland China, Singapore, Taiwan and Indonesia were also lower.

Bucking the trend was the New Zealand NZX 50, which rose 0.4 percent to 3,228.99. Falling between the Christmas holiday and New Year’s, trading throughout the region was generally light.

Japan’s industrial output dropped a seasonally adjusted 2.6 percent last month — the first decline in two months. But the negative news was mitigated by expectations of rebounding manufacturing and production this month and next.

On Wall Street on Tuesday, the Dow Jones lost less than 0.1 percent to close at 12,291.35. The S&P 500 was up marginally to 1,265.43. The Nasdaq composite rose 0.3 percent to 2,625.20.

Consumer confidence surged to an eight-month high, but home prices fell in 19 of the 20 cities tracked by the Standard & Poor’s/Case-Shiller index. That report dampened investors’ enthusiasm about a jump in consumer confidence to the highest level since April.

Benchmark crude oil rose 18 cents to $101.52 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.66 to finish at $101.34 per barrel on the Nymex on Tuesday.

In currency trading, the euro was nearly unchanged at $1.3070 from $1.3069 late Tuesday in New York. The euro has been weak because of worries about Europe’s government debt crisis. It has edged up against the dollar but is still trading just above an 11-month low of $1.2943 reached on Dec. 14.

The dollar fell to 77.79 yen from 77.85 yen.

NEW YORK – Stocks were eking out small gains Tuesday on mixed economic news. Consumer confidence surged to an eight-month high, but home prices dropped in major cities. Sears plummeted after reporting that it would close more than 100 stores around the country.

In the latest sign of a bumpy recovery in the housing market, home prices fell in 19 of the 20 cities tracked by the Standard & Poor’s/Case-Shiller index. Atlanta, Detroit and Minneapolis posted the biggest declines. Prices in Atlanta and Las Vegas fell to their lowest points since the housing crisis began.

That report dampened investors’ enthusiasm about a jump in consumer confidence to the highest level since April. The New York-based Conference Board reported that its Consumer Confidence Index rose almost 10 points to 64.5 in December. Economists watch the numbers closely because consumer spending accounts for about 70 percent of U.S. economic activity.

Henry Herrmann, chief executive officer at the investment management firm Waddell & Reed, said the increase reflected the fact that more jobs have been created in recent weeks, which will likely lead to “a more sustained” economic recovery.

“If job creation will come with wage improvement in the coming weeks, it will boost confidence further,” Herrmann said.

The Dow Jones industrial average was up 17 points at 12,311 as of noon Eastern. The S&P 500 was up less than 2 points at 1,267. The Nasdaq composite was off 7 points at 2,626.

The stock market was closed Monday in observance of Christmas. Stocks are expected to trade within a narrow range this week as trading remains light.

The Dow average closed at a five-month high last week after a run of strong economic data in the U.S. However analysts expect any market gains to be tempered by worries over the European debt crisis.

Italy’s borrowing costs rose Tuesday, reflecting investor anxiety. The yield on the country’s ten-year bonds hit 7 percent again, a level that is considered unsustainable in the long run. Greece, Ireland and Portugal had to seek relief from their lenders after their own borrowing costs rose to that level.

Italy is the euro zone’s third-largest economy and is considered too big to bail out. Mario Monti, the country’s new premier, got parliamentary approval last week for a big austerity package that is intended to save the country from financial disaster.

Markets have grown increasingly fearful over the past few months that Italy will find it difficult to pay off its massive debts, which stand at around $2.5 trillion.

In corporate news:

• Sears Holding Corp. plunged 23 percent to $35.04, the most in the S&P 500, after the retailer announced plans to close between 100 and 120 Sears and Kmart stores after poor sales during the holidays, the most crucial time of year for retailers.

• U.S. oil and gas explorer Endeavour International Corp. rose 15 percent to $7.40 after the company announced an agreement to buy ConocoPhillips’ interest in three U.K. oil fields in the Central North Sea for $330 million.

• MetLife Inc. rose 1 percent to $31.61 after saying it will sell its U.S. retail deposit business to GE Capital as it moves away from being a bank holding company.

LONDON – Signs of a global economic slowdown and stresses in Europe’s financial system kept investors cautious on Thursday, causing losses in Asian markets, limiting gains in Europe and keeping the euro near 11-month lows.

Surveys showed Japanese business confidence and Chinese manufacturing had both slipped, while European industrial and services sectors continued to contract, though less than expected.

Concerns over Europe’s debt crisis are squeezing credit conditions for banks in the region. The fear that a bank might not be able to withstand losses on its holding of shaky government bonds makes the banks less inclined to lend to each other, as they normally do to fund their hugely expensive daily operations.

Many banks are relying on cheap credit from the European Central Bank for that money, but in the meantime they are cutting down on lending to businesses and households.

As a result, the real economy in Europe is sliding toward recession.

The purchasing managers’ index published by financial data company Markit showed eurozone manufacturing and services output contracting for a fourth month in December, although not as much as economists were expecting. The combined index for the two sectors stood at 47.9 in December, up from 47.0 in November. A figure below 50 indicates contraction.

“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.

A day after suffering sharp losses, European stocks rose slightly. Britain’s FTSE 100 rose 0.5 percent to 5,395.37. Germany’s DAX gained 0.9 percent to 5,727.67 and France’s CAC-40 added 0.6 percent to 2,993.30.

Wall Street was likewise headed for modest gains, with Dow Jones industrial futures up 0.2 percent to 11,784 and S&P 500 futures gaining 0.5 percent to 1,211.80.

The euro was steady at 1.2993, near its lowest levels so far this year.

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 interest rates in its last bond auction of the year on Wednesday. The longer the country’s borrowing rates remain high, the bigger the financial burden will be. The higher rates reflect rising doubts that the country will be able to repay its debts.

The Italian government will hold a confidence vote on its euro30 billion ($39 billion) package of tax hikes and spending cuts that have been hotly contested by lawmakers and unions.

Stocks faced stronger headwinds earlier in Asia. 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.”

The dollar slipped to 77.91 yen from 78.07 yen late Wednesday in New York.

Oil prices, which plunged more than $5 on Wednesday, drove down energy-related shares and steadied on Thursday.

Benchmark oil for January delivery was up 81 cents at $95.72 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.

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Pamela Sampson in Bangkok 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.