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)

It’s a bittersweet way for investors to begin a new year.

On the one hand, economic news in the U.S. has been getting steadily better. This holiday shopping season is shaping up to be the best since the Great Recession; the housing market is showing signs of life and even the job market is on the mend.

Then, there’s Europe. The region’s leaders have failed again to convince investors that they will be able to prevent a breakup of their 17-nation currency union. Greece could still default on its debt, causing huge losses for banks in France and elsewhere that hold Greek bonds. Investors fear that could cause a financial panic to spread around the world, like what happened in 2008 after the U.S. brokerage Lehman Brothers collapsed.

In the U.S., too, there are plenty reasons for investors to be cautious. Many companies are still wary of hiring, and banks are afraid to turn on the lending spigots.

Who better to guide investors during these uncertain times than Bob Doll, who helps oversee $3.6 trillion in assets as chief investment officer at the world’s biggest money manager, BlackRock.

Doll recently spoke with The Associated Press about how 2011 worked out for investors, what he’s optimistic about in 2012 and what he’s worried about. He’s hopeful that Europe can stick to its goal of greater fiscal austerity. But he acknowledges that — like his own New Year’s resolution of losing 15 pounds — enforcing the outcome is the tricky part.

Here are excerpts from the conversation, edited for clarity.

Q: How does 2011 stack up for you?

A: We entered the year hopeful. Global economies were looking better. But the tsunami disaster in Japan cast a bigger shadow on global growth than a lot of people initially thought. Then there were big political upheavals in the Middle East with the Arab Spring. Those political and social issues contributed to a rise in oil prices that didn’t help the fledgling U.S. economic recovery. Then Europe kept coming back as problem. All the wild cards that showed up were on the negative side. The year started high on hopes that were dashed.

Q: With Europe looming large going into the New Year, what’s the outlook for 2012?

A: The probability of a solution to Europe’s issues is low. Nobody even knows what it will be. Or what a solution looks like.

The European authorities’ attitude to dealing with their problem is to close their eyes, hold their noses and hope it might go away. Stumbling along is the most likely path forward.

The alternative is more troublesome. If there’s immense pressure on politicians, there can be an accident that takes the form of a bankruptcy, or nationalizing some banks, the collapse of the euro, or that a country exits the European Union. Nobody even knows how that can potentially take place.

Muddling through is the best option. Europe can then face a mild recession and economic contagions are limited. But the darker scenario could lead to a financial contagion which will be drag the global economy down.

Q: But that won’t make the problems go away.

Q: The European Central Bank has a lot of different masters to serve. The ECB has Germany looking over its shoulder and is aware that it will have to help the troubled countries, but doesn’t want to help them too fast.

They want to see fiscal austerity before bailing out anyone. But how do you enforce fiscal austerity? It’s nice for me to say that I will lose 15 pounds in the first month of the year. What recourse does anybody have if I’ve actually gained 2 pounds instead?

Q: It’s like those stories coming out of Greece where people get higher taxes tacked on to their utility bills and they say they won’t pay them because they can’t.

A: Exactly. It’s an illustration of the principle that they want to do the right thing, but how can they get it done if nobody will pay the bill.

Q: OK, let’s talk about the U.S. What’s your view of economic growth here?

A: One thing is for sure: we are not heading into a recession. The recent numbers are encouraging, but we can’t get carried away. If the economy grows from 2.5 percent to 3 percent or a little higher, we can’t expect the next stop to be 4 percent.

Consumers are spending, but not a lot. Employers are hiring, but not a lot. There are constraints and headwinds that prevent us from having the typical bounce-back recovery that you’d like to see after a recession. What’s important for the U.S. is to maintain respectable growth. Our economy is not yet strong enough to withstand any financial contagion that spreads from Europe.

Q: And what about the big drag on the economy: housing. Is there a turnaround on the horizon?

A: My view is that we are probably in a long-term bottoming process in real estate. According to the Case-Shiller index, the cataclysmic decline in home prices has long ended and prices bottomed out in May 2009. But we’ve continued to bounce along. Banks are unwilling to make mortgage loans and many loans are higher in value than the homes. All that’s kept the real estate recovery very slow.

New construction is taking place at just half the pace of population growth. At some point those things will have to balance out.

Q: Globally, China and India seem to be slowing down. Does that worry you, given that a lot of corporate growth seems to have come from overseas lately?

A: You’re right; corporate profits don’t equate to U.S. growth anymore. U.S. consumption only accounts for 28 percent of the S&P 500 profits. Only 55 percent of the largest companies’ revenue comes from the U.S.

Even with continued slowing, China and India will count for about half of global GDP growth in 2012. So those are critical economies. If the authorities can beat runaway inflation in those countries, and Europe doesn’t fall off a cliff, their economies will have a soft landing. And that’s important.

Q: Did I hear you right when you said you’re aiming to lose 15 pounds?

A: Yeah. Fifteen pounds would be a good number to lose, but only after the New Year.

Q: But if I check back with you in a month I wouldn’t be able to enforce it, right? Just like the ECB?

A: Exactly. (Breaks into booming laughter.) Who’s going to enforce it?

BANGKOK – World stocks fell Wednesday after a survey showed China’s factories are cutting production and the U.S. lowered its third quarter growth estimate, adding to pessimism from Europe’s simmering debt crisis.

Benchmark oil fell below $97 a barrel while the dollar strengthened against the euro and held steady against the yen.

European shares sank in early trading. Britain’s FTSE 100 fell 0.3 percent to 5,191.94 and Germany’s DAX lost 0.4 percent to 5513.08. France’s CAC-40 was down 1 percent to 2,844.49.

Futures augured a lower open on Wall Street. Dow Jones industrial futures lost 0.7 percent to 11,362 while S&P 500 futures slipped 0.8 percent to 1,173.10.

Asian stock markets posted broad losses earlier in the day, hit by the signs of weakness in the world’s two biggest economies. The U.S., a major market for Asia’s exporters, grew at a 2 percent annual rate from July through September, down from an initial estimate of 2.5 percent. China, meanwhile, suffered a fall in manufacturing activity in November, according to a preliminary survey.

Hong Kong’s Hang Seng slid 2.1 percent to 17,864.43. South Korea’s Kospi lost 2.4 percent to 1,783.10 and Australia’s S&P/ASX 200 shed 2 percent to 4,051. Mainland China’s Shanghai Composite Index fell 0.7 percent to 2,395.07, posting its sixth straight session of losses. Japanese stock markets were closed for a public holiday.

Jackson Wong, vice president of Tanrich Securities in Hong Kong, said already weak market sentiment was further dampened by HSBC’s China manufacturing index showing a contraction in activity.

The manufacturing gauge fell to 48 in November from 51 in October — its sharpest fall since March 2009. A reading below 50 indicates contraction from the previous month, but the index often undergoes significant revision from its preliminary level.

“The market is still waiting for some kind of price catalyst to bound back. Otherwise, we still trend down bit by bit until something happens,” Wong said.

Higher borrowing costs for Spain, meanwhile, renewed worries about Europe’s debt crisis. The higher rates suggest that investors are still skeptical that the country will get its budget under control despite a new government coming to power this week.

Investors have been worried that Spain could become the next country to need financial support from its European neighbors if its borrowing rates climb to unsustainable levels.

Greece was forced to seek relief from its lenders after its long-term borrowing rates rose above 7 percent. The rate on Spain’s own benchmark 10-year bond is dangerously close to that level, 6.58 percent.

Underscoring jitters was the lack of market reaction to an announcement by the International Monetary Fund that it will provide quick cash on flexible terms to countries facing sudden financial stress.

“Failure of this news to result in significant gains across markets shows just how cautious investors are,” Stan Shamu of IG Markets in Melbourne said in a report.

Concerns remain that Europe’s debt crisis is pushing the region toward recession, which would slow industrial activity in countries around the world that export to Europe.

Australian resource shares took a big hit after the country’s House of Representatives approved a law imposing a windfall profits tax on big mining companies. The Senate is expected to endorse the measure in early 2012.

BHP Billiton, the world’s largest mining company, fell 3.1 percent. Rival Rio Tinto lost 3.4 percent and Energy Resources of Australia plummeted 5.9 percent.

In Seoul, auto parts maker Mando rose 2.6 percent on hopes that a free trade pact between South Korea and Washington would boost its earnings, Yonhap News Agency reported.

On Tuesday, the Dow Jones industrial average lost 0.5 percent to close at 11,493.72. The Standard & Poor’s 500 fell 0.4 percent to 1,188.04. The Nasdaq composite fell 0.1 percent to 2,521.28.

Benchmark oil for January delivery was down $1.04 to $96.97 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.09 to finish at $98.01 per barrel on the Nymex on Tuesday.

In currencies, the euro fell to $1.3457 from $1.3509 late Tuesday in New York. The dollar was little changed at 76.98 yen.

BANGKOK – World stock markets were mostly higher Friday following signs of progress in debt-plagued Europe — a successful bond sale in Italy and the naming of a new leader in Greece.

Benchmark oil rose to $98 per barrel while the dollar slipped against the euro and the yen.

European shares posted gains in early trading. Britain’s FTSE 100 rose 0.6 percent at 5,472.80. Germany’s DAX rose 0.9 percent at 5,919.99 while France’s CAC-40 added 0.8 percent to 3,087.77.

Wall Street was also poised for gains, with Dow Jones industrial futures 0.1 percent higher at 11,869 and S&P 500 futures rising 0.2 percent to 1,239.30.

The gains in Europe were in line with trading earlier in the day in Asia.

Japan’s Nikkei 225 index closed up 0.2 percent to 8,514.47, a day after the index fell to a five-week closing low of 8,500.80.

Hong Kong’s Hang Seng gained 0.9 percent to 19,137.17 and South Korea’s Kospi added 2.8 percent to 1,863.45. Australia’s S&P/ASX 200 rose 1.2 percent to 4,296.50. Mainland China’s Shanghai Composite Index rose marginally to 2,481.08.

Investors were calmed by news that Greece — which is struggling to pull back from the brink of bankruptcy — had named Lucas Papademos, a respected economist, as its new prime minister on Thursday.

Another sign of stability came after Italy was able to borrow $6.8 billion at lower interest rates than analysts expected. On Wednesday, Italy’s 10-year bond yields shot up alarmingly, stoking panic in financial markets that the country was heading toward a Greece-style debt crisis.

Confidence was also boosted by the prospect of economist Mario Monti replacing Italian Premier Silvio Berlusconi, who has been viewed as an obstacle to meaningful economic reform.

“Europe still dominates and there are still huge concerns, but Greece has a new prime minister and Italy has a new prime minister in the wings, and everyone is much more aware of the seriousness of the nature of what is confronting Europe,” said Andrew Sullivan, principal sales trader at Piper Jaffray in Hong Kong.

Traders have fretted that debt troubles in Italy and Greece could blow up into a massive liquidity crisis and lead to a global financial meltdown.

The European Union warned Thursday that the grouping of 17 nations that use the euro common currency could slip back into recession next year. The European Commission predicted the euro countries will grow a barely perceptible 0.5 percent in 2012 — much less than its earlier forecast of 1.8 percent.

Europe has already bailed out Greece, Portugal and Ireland — but Italy is a much larger economy and its mountain of debt — $2.6 trillion (euro1.9 trillion) — is far too massive for the continent to cover.

Sullivan said economic data next week on the world’s No. 1 economy will be closely watched.

“If any of that data comes out bad, it’s probably going to put Asia into more of a downturn. If there’s bad data out of the U.S. and more out of Europe, we can see Asia taking another step down,” Sullivan said.

Hong Kong-based ERA Mining Machinery Ltd. shot up 19.7 percent after U.S.-based Caterpillar Inc. said it was seeking to buy the Chinese maker of mining machinery for as much as $886 million. ERA designs, builds, sells and supports equipment for underground coal mining in China.

In Seoul, technology shares jumped. LG Electronics gained 6.4 percent and Samsung Electronics was up 5.1 percent. Shares of SK Telecom Co., South Korea’s top mobile carrier, rose 3.1 percent after the company offered to buy a controlling stake in Hynix Semiconductor, Yonhap News Agency reported.

India’s privately owned Kingfisher Airlines dropped 12.7 percent after the carrier was forced to cancel dozens of flights as pilots and crew called in sick after their October salaries were delayed.

In New York on Thursday, the Dow Jones industrial average rose 1 percent to close at 11,893.86. It plunged 389 points Wednesday after Italy’s borrowing rates soared and talks in Greece to name a new prime minister broke down.

Positive economic data from the U.S. also boosted hopes that the world’s No. 1 economy would avoid a new recession.

The Labor Department reported that the number of people applying for unemployment benefits in the U.S. fell to 390,000 last week — the fewest since April. The data suggested layoffs are easing and that the economy grew slightly better over the summer than estimated.

The S&P 500 index gained 0.9 percent to 1,239.70. The Nasdaq rose 0.1 percent to 2,625.15.

In currency trading, the euro rose to $1.3653 from $1.3581 late Thursday in New York. The dollar fell to 77.34 yen from 77.66 yen.

Benchmark oil was up 30 cents at $98.08 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $2.04, or 2.1 percent, to finish at $97.78 on Thursday.

BANGKOK – Asian stock markets were mostly higher Friday following signs of progress in debt plagued Europe — a successful bond sale in Italy and the naming of a new leader in Greece.

Hong Kong’s Hang Seng gained 0.4 percent to 19,035.94 and South Korea’s Kopsi added 1.2 percent to 1,835.34. Australia’s S&P/ASX 200 rose 0.2 percent at 4,251.70. Benchmarks in Singapore, Taiwan and New Zealand also rose.

After opening higher, Japan’s Nikkei 225 index slipped 0.1 percent to 8,492.36,

Investors were calmed after Greece — which is struggling to pull back from the brink of bankruptcy — named Lucas Papademos, a respected economist, as its new prime minister on Thursday.

An additional sign of stability came after Italy was able to borrow $6.8 billion at lower interest rates than analysts expected. On Wednesday, the rise in Italy’s 10-year bond yield to well over 7 percent stoked panic in financial markets that the country was heading toward a Greece-style debt crisis.

Traders are also fretting that debt troubles in Italy and Greece could blow up into a massive liquidity crisis and lead to a global financial meltdown.

In New York on Thursday, the Dow Jones industrial average rose 1 percent to close at 11,893.86. It plunged 389 points Wednesday after Italy’s borrowing rates soared and talks in Greece to name a new prime minister broke down.

Positive economic data from the U.S. also boosted hopes that the world’s No. 1 economy would avoid a double dip recession.

The Labor Department reported early Thursday that the number of people applying for unemployment benefits in the U.S. fell to 390,000 last week — the fewest since April. The data suggested layoffs are easing and that the economy grew slightly better over the summer than estimated.

The S&P 500 index gained 0.9 percent to 1,239.70. The Nasdaq rose 0.1 percent to 2,625.15.

BANGKOK – Asian stock markets struggled but European shares advanced Tuesday as fears that Italy could become the next domino to fall in Europe’s debt crisis were muted by Greece edging back from the brink.

Benchmark oil hovered near $96 per barrel, while the dollar fell against the euro and the yen.

Stocks in Europe gained in early trading. Britain’s FTSE 100 rose 0.8 percent to 5,552.21 while Germany’s DAX was 1 percent higher at 5,986.18. France’s CAC-40 added 0.9 percent to 3,129.43. Wall Street was headed for a lower opening, with Dow Jones industrial futures down 0.1 percent to 1,256.50 and S&P 500 futures losing 0.1 percent to 1,256.50.

In Asia earlier in the day, stocks struggled to make headway. Japan’s Nikkei 225 index fell 1.3 percent to close at 8,655.51. South Korea’s Kospi swung into negative territory midday, to close 0.8 percent down at 1,903.14.

Hong Kong’s Hang Seng was nearly unchanged, closing less than 1 point higher at 19,678.47. Australia S&P/ASX 200 rose 0.5 percent to settle at 4,293.80.

Mainland Chinese shares slipped, with the benchmark Shanghai Composite Index edging down 0.2 percent to 2,503.84 while the smaller Shenzhen Composite Index dropped 1 percent to 1,054.73.

Wall Street finished higher Monday on news that Greece would receive the latest installment of emergency aid as long as the country’s two main parties commit to implementing economic reforms agreed to by the country’s previous government.

The Dow rose 0.7 percent to close at 12,068.39. The Standard & Poor’s 500 index rose 0.6 percent to 1,261.12. The Nasdaq rose 0.3 percent to 2,695.25.

Francis Lun, a Hong Kong-based analyst, said Greece’s willingness to implement changes demanded by the European Union — and hopefully prevent the country from descending into insolvency — helped some markets eke out slight gains.

“Markets rose slightly today mainly because I think Europe managed to temporarily solve the problem,” Lun said. “Investor confidence has been restored. They went bargain-hunting.”

Further gains could come Wednesday with the release of monthly inflation data from China. Price increases are expected to moderate, reinforcing expectations that the government will refrain in the near-term from monetary tightening.

“China’s number should fall below 6 percent because the price of pork has been falling sharply this month,” Lun said. “That one item alone will bring the CPI figure below 6 percent. That means policymakers can breathe a sigh of relief that high inflation has peaked.”

Meanwhile, as Greece’s economy hobbled along on life support, worries began to surface about Italy, where the prospect of financial disaster was real because of Rome’s huge debts and slow growth.

Unlike Greece, Ireland and Portugal — the three countries that Europe has already bailed out — Italy’s economy could be too large to rescue.

Soaring borrowing rates in the past week have intensified pressure on Premier Silvio Berlusconi to resign.

The yield on Italy’s 10-year bonds jumped Monday to 6.67 percent, drawing uncomfortably near the 7 percent threshold that forced both Ireland and Portugal to accept bailouts.

“Traders do not want to see yields advance to 7 percent and above, after the fate suffered by the likes of Greece, Ireland and Portugal when their yields rose to those levels,” Stan Shamu of IG Markets in Melbourne wrote in a report.

Investors want the Italian government to quickly pass measures to boost growth and cut debt. But defections from Berlusconi’s coalition government mean he no longer commands enough loyalty to pass the reforms.

In Tokyo, embattled Olympus Corp. plummeted 29 percent after admitting it had used a series of acquisitions to cover up losses dating back to the 1990s.

Japan’s exporters continued to be battered by sustained strength in the yen, which reduces overseas profits. Copier maker Ricoh Co. fell 3.3 percent. Technology company Fujitsu dropped 3.8 percent and Hitachi Ltd. lost 2.3 percent.

In mainland China, power utilities and coal companies led the gains while shares in real estate, cement and media companies weakened.

“Premier Wen Jiabao comments on keeping property-tightening in place was overshadowing the market, along with profit-taking,” said Cai Dagui, an analyst at Ping’an Securities, based in Shenzhen.

Shanxi Coking Co. hit the daily limit of 10 percent while Shanghai Electric Power Co Ltd. gained 4.4 percent.

Hong Kong-listed property shares also slumped. China Overseas Land & Investment fell 5 percent while China Resources Land lost 3.6 percent.

In energy trading, benchmark crude for December delivery was up 40 cents at $95.91 in electronic trading on the New York Mercantile Exchange. The contract rose $1.26 to settle at $95.52 in New York on Monday.

The euro was higher at $1.3776 from $1.3761 on Monday in New York. The dollar was slightly lower at 77.97 yen from 78.02 yen.

___

AP researcher Fu Ting contributed from Shanghai.

HONG KONG – Asian stocks rose strongly Thursday following gains on Wall Street, which was boosted by signs that European policymakers will act to support struggling banks and positive U.S. economic data.

The dollar strengthened against the euro but weakened against the Japanese yen while oil prices fell.

Japan’s Nikkei index rose 1.9 percent to 8,544.68 while Korea’s Kospi index jumped 3.5 percent to 1,725.11. Hong Kong’s Hang Seng index surged 4 percent to 16,888.56. Benchmarks in Taiwan, Singapore and Australia also rose.

Markets in mainland China were closed for a holiday.

Global financial markets are recouping some of their losses after a disastrous start to the week prompted by investors’ fears of procrastination and confusion among European leaders as they tried to get a handle on the continent’s debt crisis.

Those fears were eased after reports indicating that policymakers were working to coordinate and bolster action. The International Monetary Fund may push for radical changes in the way the region’s debt crisis is handled. German Chancellor Angela Merkel also said she would support a Europe-wide plan to recapitalize banks if required.

In the U.S., a service sector survey indicated that growth might pickup, while another report found that private companies added slightly more jobs in September.

In New York on Wednesday, Wall Street held on to gains from the day before. The Dow Jones industrial average finished 0.8 percent higher at 10,899.35 and the broader Standard & Poor’s 500 index rose 1.2 percent to 1,137.83.

In currencies, the euro fell to $1.3322 from $1.3351 late Wednesday while the dollar fell to 76.74 Japanese yen from 76.96.

Benchmark crude fell 5 cents to $79.63 per barrel in New York, while Brent crude fell 25 cents to $102.48 in London.

SHANGHAI – Signs that the powerhouse Chinese economy is slowing have spooked global markets and sharpened fears that the world economy will not escape another recession, so much so that a small, preliminary survey of Chinese manufacturers contributed to a global stock market plunge this week.

However, analysts said Friday that the dramatic fallout from a preliminary reading of HSBC’s index of manufacturing for September far exceeded the data’s importance. And while the world’s No. 2 economy is slowing as expected, they said, growth will remain relatively strong.

If nothing else, the market rout that began Thursday and continued Friday reflects how much the rest of the world is relying on China, one of the few big economies that is expanding at a rapid clip, to stave off recession.

HSBC’s preliminary survey, released about a week before the final survey is due, showed a two-month low of 49.4. That followed an August reading of 49.9, and anything under 50 indicates that activity is contracting.

Coming alongside weak indicators from other major economies, the data prompted panicked selling by global investors afraid that governments hamstrung by debt crises, inflation and unemployment may be unable to avert a recession.

But the HSBC survey is only a monthly snapshot, ill-suited to indicate long-term trends, said Xianfang Ren, chief China economist for IHS Global Insight.

It also is heavily weighted toward exporters, which are bound to be feeling cautious given the current global outlook, and is not a reliable measure of the broader economy, said CLSA analyst Andy Rothman. An official manufacturing index that surveys a bigger number of companies is due around the end of September.

“If you look at other measures of what’s happening in China … everything is cooling down, but not dramatically, and there’s still strong growth,” Rothman said. Most forecasters expect economic growth of above 9 percent this year and between 8.5 percent and 9 percent next year.

Still, what’s clear is that China’s role in powering world growth is significant.

That’s especially so for nations such as Australia that are heavily dependent on China’s voracious demand for the minerals they export, and for export-reliant countries in Asia including Singapore, Taiwan and Japan. The Conference Board forecasts China will account for about a third of the increase in global GDP this year.

Yet despite China’s rising power, experts say its economy is still not big or strong enough to fully compensate for meltdowns elsewhere, since its own investment and spending is only one-sixth that of the European Union and United States.

“From a global perspective, China’s domestic demand is still way too small to offset the impact of a recession” in Europe and the U.S., Deutsche Bank economist Ma Jun said in a report.

To make up for a 3 percentage point drop in growth in those economies, China would have to grow by 18 percent this year, he says.

“This is mission impossible.”

Some worry that China’s economic planners in their zeal to reduce inflation from near three-year highs could overshoot by cooling the economy too much. August’s inflation figure of 6.2 percent, down from 6.5 percent in July, suggests that Beijing’s inflation battle may be yielding results that would allow it greater leeway for policies aimed at keeping growth on track.

A drop in global demand for China’s exports could also wallop its economy, as it did in 2008, though domestic factors such as consumer spending and investment in infrastructure are increasingly driving growth.

Most economists still downplay any risk of a so-called “hard landing” in China that would darken the global outlook.

Such fears are “unwarranted,” said HSBC’s own economist Hongbin Qu. “Resilient domestic demand is sufficient to support around 8.5 percent to 9 percent growth in the coming quarters.”

China’s advantages over other major economies include its relatively low level of debt despite growing worries over local government borrowing, its cash-rich corporate sector and pent-up demand among its newly affluent consumers.

Massive stimulus spending launched in response to the 2008 global crisis is still washing through the economy, driving sales for both heavy industries like steel and cement, and light ones such as appliances, clothing and home furnishings.

“Chinese companies are making money and the private consumption is increasing. If we assume government spending remains at the current level, the economy will continue to grow,” said Peng Yunliang, a strategist with Shanghai Securities.

Earlier this week, the International Monetary Fund cut its growth forecast for China this year, but only by one tenth of a percentage point to 9.5 percent.

In revising its outlook for China, the IMF reiterated its advice to Beijing to do more to spur consumer demand, in part by improving social services to help relieve pressures on families to save disproportionate amounts of their income to cover their medical, education and retirement needs.

___

Researchers Yu Bing in Beijing and Fu Ting in Shanghai contributed to this report.

BANGKOK – Asian stock markets were mixed Wednesday as investors weighed weaker-than-expected economic growth in the 17 countries that use the euro against data showing that U.S. manufacturing is on the upswing again.

Oil prices hovered above $87 a barrel in Asia after a report on U.S. crude inventories gave ambiguous signs about the strength of consumer demand. The dollar was lower against the euro and the yen.

Hong Kong’s Hang Seng gained 0.9 percent to 20,402.95, buoyed by a visit by Chinese vice Premier Li Keqiang, including a pledge to expand the role of Hong Kong as an offshore trading center for China’s yuan currency.

“So that’s why the market is up today,” said Hong Kong-based analyst Francis Lun. “Otherwise, there’s no bad news around, and no bad news means good news.”

Beijing is trying to reduce reliance on the dollar by promoting the yuan for trade and finance. It has been promoting Hong Kong, a Chinese territory with its own currency, as an offshore market for foreigners to conduct yuan business separate from the mainland, which is kept isolated from global capital flows.

Australia’s S&P/ASX 200 was up 1.6 percent to 4,317.60. Benchmarks in India and Singapore were also higher.

But Japan’s Nikkei 225 sank 0.3 percent to 9,080.47 as a strengthening yen dragged down the country’s vital export sector.

Toyota Motor Corp. lost 2.2 percent and rival Honda Motor Corp. slid 3.4 percent. Multinational conglomerate Hitachi Ltd. lost 3.3 percent, and consumer electronics giant Sony was down 2.2 percent.

Benchmarks in Taiwan, mainland China, the Philippines and Malaysia were also lower.

South Korea’s Kospi, which tumbled last week amid massive foreign selling, rose 1.3 percent to 1,904.80.

Stocks around the world lost their steam Tuesday after muted German growth figures reinforced fears over the global economy.

Wall Street closed lower after a volatile day. The Dow dropped 0.7 percent to 11,405.93 — the first time in seven trading days that the Dow rose or fell by less than 100 points. The Standard & Poor’s 500 index fell 1 percent to 1,192.76. The Nasdaq composite fell 1.2 percent to 2,523.45.

U.S. economic reports Tuesday were mixed. Housing remains weak, but factory output rose last month at its fastest pace since an earthquake in Japan disrupted global manufacturing in March.

The mixed data suggest that the economy remains fragile but is not on the cusp of another recession.

Europe’s economy and debt troubles have been among global investors’ main concerns over the last year and a half. Some European countries have borrowed so much that they may need help repaying debt.

On Tuesday, the European Union reported that economic growth in the 17 countries that use the euro slowed to 0.2 percent between April and June from 0.8 percent the previous quarter. Germany’s growth fell to 0.1 percent from 1.3 percent.

French President Nicolas Sarkozy and German Chancellor Angela Merkel met in Paris to discuss the crisis but failed to calm worries about Europe’s debt problems.

The euro rose to $1.4403 from $1.4397 late Tuesday in New York. The dollar slipped to 76.69 yen from 76.78 Japanese yen.

Benchmark oil for September delivery was up 67 cents to $87.32 a barrel in electronic trading on the New York Mercantile Exchange. Crude fell $1.23 to settle at $86.65 on Monday.

In London, Brent crude for October delivery was up 14 cents to $109.27 per barrel on the ICE Futures exchange.

NEW YORK – Wall Street’s wildest week since 2008 continued with another 400-plus point move for the Dow on Thursday. This time, stocks shot up after investors saw small signs that the economy might not be headed into another recession.

Fewer Americans joined the unemployment line last week, and a technology bellwether said revenue could grow faster this quarter than analysts expected. The news pushed prices on long-term Treasurys down, and gold fell from its record high.

The Dow Jones industrial average rose 549 points, or 5.1 percent, to 11,269 at 3:45 p.m. in New York.

During a calm market, a 400 point move would rank as the Dow’s biggest in months. During this volatile week, it’s the smallest. On Monday, The Dow plunged 634 points only to gain 429 points Tuesday and then sink 519 points Wednesday. If the Dow stays above 400 points through today’s close, it would be the first time in its history that it had four-straight 400-point days.

Such big up-and-down swings are reminiscent of 2008, when the financial crisis battered stocks. The last time the Standard & Poor’s 500 index rose or fell by 4 percent in four straight trading days, as it has just done, was Nov. 19, 2008 through Nov. 24, 2008. Over that span, the index went from down 6.1 percent to down 6.7 percent to up 6.3 percent to up 6.5 percent.

Carlton Neel, who manages about $2 billion as a senior portfolio manager at Virtus Investment Partners said investors are so scared of being the last one out of the market in a downturn or the last one in during a rally that they are stampeding in herds, creating more volatility.

“Fear tends to be a much more powerful emotion, and the sell-offs tend to be more violent than the rallies,” he said. “But people are worried about missing the bottom, so you will have a few melt-ups along the way.” That’s because memories of the last meltdown in 2008 are still fresh in the mind of many investors.

In October 2008, the Dow rose and fell by more than 400 points four times each. That includes a 936 point surge on Oct. 13 after European central banks pledged more aid to banks and the U.S. Treasury offered more details about how it would help U.S. banks. Two days later, when a report showed retail sales had fallen more than anticipated, the Dow dropped 733 points.

On Friday, the government will say how much people spent at retailers during July. Economists expect a 0.4 percent rise, according to FactSet.

The S&P 500 rose 64 , or 5.8 percent, to 1,185. It was the fourth straight day the index rose or fell by 4 percent. That hasn’t happened since Nov. 19-24, 2008 when it rose by at least 6.1 percent for two straight days and then fell by at least 6.3 percent for two more days.

Thursday’s gain came after the government said the number of people filing for unemployment benefits for the first time fell to 395,000 last week, down 7,000 from a week earlier. It’s the first time the number has dropped below 400,000 in four months.

Analysts said it may be a sign that the job market is slowly improving after its three-month slump. Job growth slowed to an average of 72,000 in May, June and July. In the previous three months, employers added 215,000 jobs per month, on average.

“It’s the first scrap of economic data we’ve had recently that says the idea that we’re going into another recession may be overdone,” Neel said.

In the last few weeks, investors have grown more worried about the economy. The government said last month that it grew at its slowest pace in the first half of 2011 since the recession ended in 2009. Unemployment is still above 9 percent.

The Nasdaq composite index rose 133, or 5.6 percent, to 2,514.

Technology stocks helped lead stocks higher. Cisco Systems Inc. profit for the latest quarter topped analysts’ expectations. Cisco is considered a bellwether for the tech industry because it is the world’s largest maker of computer networking equipment. The company also said revenue may grow more quickly in the current quarter than analysts were anticipating. Cisco rose 15.9 percent. As a group, tech stocks in the S&P 500 rose 3.6 percent.

Financial stocks also rebounded from their steep drop Wednesday, up 4.3 percent after a 7.1 percent drop a day earlier.

Media conglomerate News Corp., which owns Fox News and The Wall Street Journal, rose 18.9 percent. Its earnings, reported late Wednesday, were stronger than analysts expected.

Department store chain Kohl’s Corp. rose 7.9 percent after it said profit rose 17 percent last quarter on stronger sales of store-label brands.

Investors had been largely ignoring the strong profits that companies have reported since July. For the 452 companies in the S&P 500 that have reported second-quarter results so far, overall earnings are up 12 percent. Instead, investors have focused on worries about the weak U.S. economy and Europe’s debt problems.

The leaders of France and Germany, the biggest Eurozone economies, said they will meet next week to talk about how to solve the region’s financial difficulties. Worries that the continent’s debt problems could hurt the banks that own European government bonds have weighed heavily on financial stocks and the broader market. Pain for European banks could lead to more trouble for the U.S. banking industry and the economy because global financial firms are so closely linked.

Reports also circulated that European officials were considering a temporary ban on selling stocks short, which is a way that traders bet a stock will fall.

Rumors have been a force driving the market in the last week. On Friday, speculation that Standard & Poor’s may downgrade the U.S. from its top AAA credit rating helped knock down stocks. It turned out to be correct.

This week, speculation has centered on European banks, French ones in particular. The head of France’s central bank said Thursday that the country’s banks are solid, and he blamed “unfounded rumors” for big drops in their stocks.

Prices for longer-term Treasurys fell, as investors felt less need to put their money in investments considered safe. The yield on the 10-year Treasury note rose to 2.27 percent from 2.11 percent late Wednesday. A bond’s yield rises when its price falls.

Investors had been pouring into Treasurys earlier in the week, and they briefly knocked the 10-year yield to a record low of 2.03 percent Tuesday afternoon. Treasurys have held onto their reputation as a safe place to put money even after S&P cut the U.S. credit rating to AA+.

Gold also benefited early this week from buyers looking for something safe. It rose above $1,801 per ounce for the first time on Wednesday as stock markets tumbled around the world. But it fell to settle at $1,751.50 on Thursday.

CME Group raised the amount of money that investors must put up to buy a gold contract on its COMEX exchange by 22 percent late Wednesday.

The Vix index, a measure of investors’ fear, fell 11.8 percent to below 40. The index shows how worried investors are that the S&P 500 will drop over the next 30 days. It does that by measuring prices for stock options that investors buy to help protect their portfolios.

The Vix, though, is still nearly 30 percent above where it was in early July and remains up for the week.

The Dow’s climb on Thursday pulls the average further away from bear market territory: The Dow ended Wednesday 16.3 percent below its high for the year, reached on April 29. A drop of 20 percent would mean the bull market that began in March 2009 has turned into a bear, a long period of stock declines.