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.

LONDON – World stocks turned lower on Friday after official data showed the U.S. economic recovery was not as fast as many had hoped.

The Commerce Department said that the U.S. economy, the world’s largest, grew at a modest 2.8 percent in the final three months of last year. While that is the fastest growth in 2011, economists had expected growth of 3 percent.

A cut in government spending was offset partly by a rise in inventories, which are expected to slow back down in the early months of 2012, hurting growth. After that, “growth will pick up again by late spring,” said Harm Bandholz, chief U.S. economist at UniCredit Bank.

With the data suggesting the U.S. recovery would continue to be a slow process, investors sold off stocks to cash in on gains made so far this month.

Britain’s FTSE 100 was down 1.1 percent to 5,733 while Germany’s DAX fell 0.4 percent at 6,511.98 and France’s CAC-40 lost 1.3 percent to 3,318.76. The euro was up 0.83 percent at $1.3189.

Wall Street edged lower on the open — the Dow Jones industrial average fell 94 points to 12,639 and the S&P 500 5.8 points to 1,312.

Other economic and corporate news released Friday contributed to sour market sentiment.

Consumer products maker Procter & Gamble Co. cut its earnings outlook and Ford Motor Co. fell short of Wall Street expectations, while Japanese games and electronics companies Nintendo and NEC issued profit warnings.

In Europe, traders digested grim statistics from Spain showing more than 5 million people without jobs. The National Statistics Institute said the jobless rate shot up from 21.5 percent — already the highest in the eurozone — to 22.8 percent in the fourth quarter.

Attention was also focused on the resumption of talks to reach a deal on how Greece can avoid a catastrophic default on its debt. 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, interest rate and much longer maturity.

The two sides have so far disagreed over what interest rate the new bonds should take. Some negotiators have said they hope to have a deal this weekend, in time for a European leaders’ meeting on Monday.

While investors appear to expect a deal at some point — the euro was up and eurozone borrowing rates were down, suggesting a steady increase in confidence — some worried that the crisis was far from over.

Portugal’s markets have worsened in recent days on fears that its austerity efforts will not be enough to achieve its deficit-reduction targets and that it may end up like Greece, needing a second bailout effort and possibly a debt writedown.

Getting economies like Portugal to grow is fast becoming a priority and is expected to be one of the main topics of discussion at the European leaders’ summit in Brussels on Monday.

Earlier in the day, Asian markets showed little momentum ahead of the weekend.

Japan’s Nikkei 225 index fell 0.1 percent to close at 8,841.22 while South Korea’s Kospi rose 0.4 percent to 1,964.83. Hong Kong’s Hang Seng rose 0.3 percent to 20,501.67 and Australia’s S&P/ASX 200 gained 0.4 percent to 4,288.40.

Japanese exporters continued to be hit by a strong yen, which reduces the value of repatriated profits. The dollar fell to 76.81 yen from 77.49 yen.

Nintendo Corp., the Japanese gaming giant behind the Super Mario and Pokemon games, plummeted 4.1 percent, a day after it lowered its annual earnings forecast to a 65 billion yen ($844 million) loss. The company blamed the strong yen for much of the loss.

Japanese electronics company NEC Corp. plummeted 7.1 percent after announcing Thursday that it was slashing 10,000 jobs worldwide and would slide into the red for the full year.

Benchmark oil for March delivery was up 5 cents at $99.75 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.

___

Pamela Sampson in Bangkok contributed to this report.

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.

BANGKOK – World stocks faced multiple headwinds Friday after disappointing Japanese earnings, higher unemployment in Spain and weak U.S. home sales. Investors awaited quarterly growth figures from the U.S. later in the day.

Benchmark oil hovered below $100 per barrel while the dollar was lower against the euro and the yen.

European shares headed lower as the latest data from Spain, which already has the highest unemployment rate among the 17 nations that use the euro, showed more than 5 million people without jobs. The National Statistics Institute said the jobless rate shot up from 21.5 percent to 22.8 percent in the fourth quarter.

Britain’s FTSE 100 slipped 0.3 percent to 5,775.29. Germany’s DAX was off 0.1 percent to 6,531.89 and France’s CAC-40 lost 0.4 percent to 3,349.82. Wall Street appeared set to open in negative territory, with Dow Jones industrial futures down marginally to 12,679 and S&P 500 futures falling less than 0.1 percent at 1,214.50.

Asian stock markets closed mostly higher, ahead of the release of fourth quarter U.S. economic growth figures. 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.”

Japan’s Nikkei 225 index fell 0.1 percent to close at 8,841.22.

South Korea’s Kospi rose 0.4 percent to 1,964.83. Hong Kong’s Hang Seng rose 0.3 percent to 20,501.67, while Australia’s S&P/ASX 200 gained 0.4 percent to 4,288.40.

Attention was also focused on the resumption of talks to reach a deal on how Greece can avoid a catastrophic default on its debt. 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 so far disagreed over what interest rate the new bonds should take.

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. 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.

Japanese exporters continued to be hit by a strong yen, which reduces the value of repatriated profits. Honda Motor Corp. slid 1.9 percent and Panasonic Corp. shed 2.3 percent. Fujitsu Ltd. plunged 3.5 percent.

Nintendo Corp., the Japanese gaming giant behind the Super Mario and Pokemon games, plummeted 4.1 percent, a day after it lowered its annual earnings forecast to a 65 billion yen ($844 million) loss. The company blamed the strong yen for much of the loss.

Japanese electronics company NEC Corp. plummeted 7.1 percent after announcing Thursday that it was slashing 10,000 jobs worldwide and would slide into the red for the full year.

Benchmark oil for March delivery was down 11 cents to $99.60 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 rose to $1.3107 from $1.3104 late Thursday in New York. The dollar fell to 77.05 yen from 77.49 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.

Stocks rose strongly early Tuesday on signs that Europe’s debt markets remain resilient and China’s economic slowdown has been gradual.

Debt auctions by Spain, Greece and Europe’s bailout fund drew solid interest from investors Tuesday, easing fears that recent credit-rating downgrades would prevent troubled nations from obtaining funds. Many had feared the downgrades would increase borrowing costs and intensify the region’s debt crisis.

The Chinese government said earlier that its economy slowed less dramatically in the fourth quarter than analysts had expected.

The Dow Jones industrial average rose 130 points, or 1.1 percent, to 12,551 in the first half-hour of trading. The Standard & Poor’s 500 index rose 12, or 0.9 percent, to 1,301. The Nasdaq composite index rose 26, or 1 percent, to 2,737.

The market was closed Monday for Martin Luther King Jr. Day.

Bank stocks were mixed after several of them reported earnings. Wells Fargo & Co. rose 3 percent after its results beat Wall Street estimates as its lending business improved. Citigroup Inc. fell 3 percent and M&T Bank Corp. fell 2 percent after their earnings fell short of estimates.

Carnival Corp. plunged 14 percent, the most in the S&P 500, after a cruise ship owned by one of its brands capsized off the coast of Italy, killing 11 passengers. Italian prosecutors are charging the captain with manslaughter, causing a shipwreck and abandoning his ship before all passengers were evacuated.

Overseas markets rose earlier Tuesday after Spain auctioned off billions in short-term debt at lower interest rates, indicating strong demand for the nation’s bonds. Spain’s borrowing costs had spiked in recent weeks on fears it would be engulfed by the debt crisis and default on its debts.

Standard & Poor’s downgraded Spain on Friday. The low rates at the auction suggested that investors took the downgrade in stride.

Greece also auctioned off short-term debt on Tuesday at a lower rate than it had been paying. And the fund to bail out Greece and other troubled nations also raised money, despite a downgrade on Monday, the Wall Street Journal reported.

The bailout fund’s credit rating is based on the ratings of the nations that back it. Its downgrade was caused by S&P’s downgrades of most nations that use the euro.

Earlier, the Chinese government said its economic growth slowed to 8.9 percent in the fourth quarter. That was the lowest in two and a half years, but still better than the 8.7 percent predicted by analysts.

A rapid slowdown in China would threaten the world economy because of slowing growth in Europe and across the developing world.

Asian and European markets rose strongly. The benchmark stock indexes in France and Germany each gained more than 1 percent.

Greece’s international lenders are inspecting the nation’s efforts at fiscal and structural reform and negotiating over its next round of bailout cash. Greece continues to rely on international loans to prevent a potentially disastrous default on its bonds.

Greece still lacks a deal with the private holders of those bonds. The international lenders say it needs a deal to get the next chunk of bailout cash.

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Follow Daniel Wagner at http://www.twitter.com/wagnerreports.

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.

LONDON – Robust growth in China helped stock markets rally strongly Tuesday as investor fears of an abrupt slowdown in the world’s second-largest economy were eased.

With Europe seemingly heading back into recession and the U.S. still to convince that it’s economy is improving, China is important to shore up the global economy as well as sentiment, especially at a time when many investors are openly fretting about a potentially-devasting Greek debt default that could prompt further turmoil in financial markets.

Government figures showed that the slowdown in Chinese growth in the final quarter of 2011 was not as big as had been feared. Though the drop to 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.

“Equity markets are giving a positive reception to the latest set of Chinese economic data which shows that the economy is managing to avoid a hard landing despite background concerns of local government debt and banks’ loan exposure to a previously overheated real estate sector,” said Neil MacKinnon, global macro strategist at VTB Capital.

Following Asia’s strong performance, Europe’s markets have traded strongly. Germany’s DAX was up 2 percent at 6,341 while the CAC-40 in France rose 1.9 percent to 3,288. The FTSE 100 index of leading British shares was 1.2 percent higher at 5,723.

Wall Street was poised for a solid return from the Martin Luther King Jr. day off Monday — Dow futures were up 1 percent at 12,508 while the broader Standard & Poor’s 500 futures rose a similar rate to 1,302.

The rebound in sentiment could also be seen in other markets as well, 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 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.

“It seems reasonable to start planning for the possibility of a Greek default in March and possible even an exit from the single currency,” said Simon Derrick, senior analyst at The Bank of New York Mellon.

Earlier in Asia, sentiment had been 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.

___ Pamela Sampson in Bangkok contributed to this report.

PARIS – Stock markets shrugged off signs of a slowing Chinese economy on Tuesday, as investors hoped for strong corporate earnings from the U.S. and looked to a new round of talks in Berlin for progress in solving Europe’s debt crisis.

The U.S. economy has shown new signs of strength recently, and investors are hoping that will boost corporate earnings results due to be announced in coming weeks. In particular, signs that the U.S. labor market is improving has raised the possibility of a recovery in American consumer spending, one of the main motors of global economic growth.

Britain’s FTSE 100 index of leading shares rose 1.0 percent to 5,668.89 and Germany’s DAX rose 2.4 percent to 6,158. France’s CAC-40 rose 2.1 percent to 3,194, while indices in Spain, Italy, Switzerland and elsewhere across Europe also recorded gains betwen 1 and 2 percent.

Ahead of the opening bell, Wall Street appeared set for a higher opening as well. Dow Jones industrial futures rose 0.5 percent to 12,402 and S&P 500 futures gained 0.6 percent to 1,283.10.

Moods were tempered by relatively gloomy indicators out of Europe.

The European Central Bank said Tuesday that the amount of overnight deposits that the region’s banks held with it rose to euro481.93 billion ($613 billion) on Monday, breaking the record euro463.56 billion set only a day before.

The high deposits mean banks are keeping spare cash in a safe place even though they earn low interest. They also reflect large amounts of cash put into the banking system from ECB emergency loans of euro489 billion taken up by more than 500 banks in late December.

Dutch electronics giant Royal Philips Electronics NV kicked of corporate Europe’s earnings season by warning that its fourth quarter profits were worse than expected due to a weak European market that made it difficult to charge customers as much as it wanted to for light bulbs.

“Our expected fourth quarter financial results have been affected by the weakness in Europe, which has impacted our health care business, as well as pricing in our consumer lighting business,” said Chief Executive Frans van Houten in a statement.

Philips shares fell 6 percent to euro14.715 in early trading in Amsterdam.

On the day that international debt inspectors were returning to Athens, Greece successfully raised euro1.625 billion ($2.07 billion) in the sale of 26-week treasury bills, at a marginally lower interest rate than a similar auction last month.

Debt-crippled Greece relies on international rescue loans to keep solvent. Although unable to issue long-term debt due to incredibly high borrowing costs, it maintains a market presence through regular treasury bill auctions.

Greece’s situation will be discusses at an “informal” meeting between Germany’s Chancellor Angela Merkel and International Monetary Fund boss Christine Lagarde in Berlin Tuesday evening.

Ahead of that meeting, Fitch Ratings said a number of euro countries, including Italy, may see their credit ratings downgraded by one or two notches by the end of this month as they struggle to cope with the debt crisis.

Fitch’s head of sovereign ratings David Riley says Tuesday the agency will give its verdict on several countries by the end of January. Fitch currently has Italy, Spain, Belgium, Ireland, Slovenia and Cyprus on so-called “ratings watch negative.”

Much interest in the markets centers on Italy, which Riley says is the “front line” of Europe’s debt crisis.

Overnight markets in Asia were marginally higher thanks to improving economic data out of the U.S., said Cameron Peacock of IG Markets in Melbourne.

The optimism was tempered by news that China’s import growth decelerated sharply in December in a new sign the world’s second-largest economy is slowing.

The customs agency said December imports rose 11.8 percent over a year ago, down from November’s 22.1 percent gain. Exports rose 13.4 percent, down only marginally from the previous month’s rate.

The country’s politically sensitive global trade surplus widened to $16.5 billion.

Weaker Chinese demand for imports reflects a slowdown in rapid domestic economic growth after Beijing tightened lending and investment curbs to prevent overheating. A slump in global demand for Chinese goods has prompted the government to reverse course and promise measures to shore up growth.

Japan’s Nikkei 225 index, reopening after a three-day holiday weekend, added 0.4 percent to close at 8,422.26. Hong Kong’s Hang Seng index rose 0.7 percent to 19,004.28 while South Korea’s Kospi jumped 1.5 percent to 1,853.22. Australia’s S&P ASX 200 rose 1.1 percent at 4,152.20. Benchmarks in Singapore, Taiwan, and Indonesia also posted gains.

Benchmark crude for February delivery rose $1.46 to $102.77 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 25 cents to settle at $101.31 in New York on Monday.

In currency trading, the euro rose to $1.2799 from $1.2762 late Monday in New York. The dollar fell to 76.85 yen from 76.89 yen.

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Pamela Sampson in Bangkok and Fu Ting in Shanghai contributed to this report.

NEW YORK (Reuters) – Hoping for something better than 2011's flat stock market, U.S. investors pushed shares higher on Tuesday to begin the new year, though questions remain about whether a rally can be sustained.

The broad S&P 500 index closed at its highest since late October as traders, with cash on hand for the new year, welcomed better-than-expected German and Chinese economic data.

The upbeat response was reinforced by U.S. economic reports showing construction spending and factory activity beat economists' forecasts.

"There were some good economic numbers from outside the U.S., and people have cash to invest for the new year so that's driving up prices," said Giri Cherukuri, head trader at OakBrook Investments in Lisle, Illinois. "It's a good start but we'll have to wait and see for the trend."

Trading volume was below normal. About 7 billion shares changed hands on the New York Stock Exchange, the Nasdaq and Amex, compared with last year's daily average of about 7.84 billion shares.

Advancers led decliners on the New York Stock Exchange by more than 16 to 5 and by about 14 to 5 on the Nasdaq.

Materials companies and financials, the lagging sectors in 2011, were among Tuesday's market leaders with the KBW bank index up 3.3 percent. U.S. Steel gained 6.5 percent to $28.17 after losing more than half its market value in 2011.

Strategists polled by Reuters in December expect the benchmark S&P 500 index to finish 2012 at 1,340 for a yearly gain of 6.6 percent. That compares with the S&P's mere 0.003 percent slip in 2011.

Data showed U.S. manufacturing sector growth accelerated in December at its strongest pace since June, while construction spending in November surged to the highest in nearly 18 months.

Some of the S&P 500's worst performers last year rallied on Tuesday. But at the same time, McDonald's Corp, the biggest gainer in 2011 among Dow components, fell 1.5 percent to $98.84.

First Solar, down 74 percent in 2011, jumped 6 percent to $35.79 and Netflix, off more than 60 percent last year, added 4.3 percent to $72.24.

The Dow Jones industrial average rose 179.82 points, or 1.47 percent, to 12,397.38. The S&P 500 Index added 19.46 points, or 1.55 percent, to 1,277.06. The Nasdaq Composite gained 43.57 points, or 1.67 percent, to 2,648.72.

The market's rise was foreshadowed by a large jump in stock index futures after weekend data showed China, the world's largest consumer of metals, avoided economic contraction in December.

Also boosting investors' mood was German unemployment, which

declined more than forecast.

Indexes held on to gains after minutes from last month's Federal Reserve meeting said a number of Fed officials believed economic conditions could well warrant a further easing of monetary policy.

Among declining stocks, Exelon Corp fell 3 percent to $42.07 after a downgrade from Macquarie [ID:nL3E8C34CY] and other utility shares also lost ground as natural gas futures hit their lowest intraday price since September 2009.

S&P utilities, the best performers last year among the top ten sectors on the S&P 500, fell 1.7 percent.

(Reporting By Rodrigo Campos; Editing by Kenneth Barry)