LONDON, Mar 1 (Reuters) News of the fastest growth in euro zone manufacturing in 19 months cheered equity investors on Wednesday, helping European stocks halve hefty losses from the previous session.
The data dimmed demand for euro zone bonds and lifted the euro to a one-week high at $1.1968 as the dollar continued to suffer from disappointing U.S. data earlier in the week.
The pan-European FTSEurofirst index was up 0.4 per cent, with oil companies leading gainers as crude prices extended Tuesday's rally.
U.S. stocks were also poised for a rebound.
The U.S. personal income and spending report for January threw up few surprises, with consumer spending up 0.9 per cent, just below expectations, leaving investors focused on nationwide manufacturing data at 1500 GMT (2030 IST).
''The data was pretty much in line with expectations,'' said Alex Beuzelin, senior market analyst at Ruesch International, adding the dollar was still suffering from Tuesday's weak data.
Weaker than expected business activity from the U.S. Midwest, a slip in consumer confidence and a fall in the sales of existing U.S.
homes on Tuesday fanned concern over the health of the world's biggest economy.
DOLLAR STRUGGLES, OIL GAINS The dollar was down 0.35 per cent against the euro. Against the yen, the dollar steadied at 115.80, having hit a one-month low below 115.45 yen in Asia.
Asian stocks closed lower, with Japan's Nikkei index down 1.5 per cent.
Oil prices inched up ahead of weekly U.S. inventory data expected to show spring refinery maintenance has begun to reode healthy fuel stockpiles.
U.S. light crude for April delivery was up 50 cents at $61.85 a barrel, while Brent was up 60 cents at $62.36, building on a 77 cent gain on Tuesday.
Euro zone government bond yields continued their recent climb as signs of a broadening recovery in the region's economy encouraged investors to bet on higher interest rates in the currency bloc.
The European Central Bank is widely expected to raise rates by a quarter point to 2.5 per cent on Thursday and to deliver two more hikes of the same size before the end of the year.
REUTERS SD PM2036