Markets rise on US, Japanese growth signs

LONDON (AP) -- Long-awaited signs of improvement in Japan's economy and growth in U.S. manufacturing pushed global stocks higher on Monday.

The ISM manufacturing survey for the U.S. showed a rebound in June thanks to new orders and higher production. The increase to 50.9 points from May's 49 shows the sector is expanding once again. A reading above 50 suggests growth, while those below indicate contraction.

The survey showed employment in the sector remained weak, however, suggesting companies are still cautious about the future.

The survey boosted stock markets as investors estimated it was strong enough to show the recovery is on track, but not so strong as to encourage the Federal Reserve to start ending its monetary stimulus program ahead of time.

In Europe, Germany's DAX rose 0.3 percent to close at 7,983.92 while France's CAC-40 gained 0.8 percent to 3,767.48. Britain's FTSE 100 rose 1.5 percent to 6,307.78.

On Wall Street, the Dow was up 1.1 percent to 15,070.68 while the broader S&P 500 was 1.2 percent higher at 1,625.53.

"This rebound in the ISM and moderate employment growth in June would leave the Fed on track to start tapering" its bond purchases in September, said Paul Dales, analyst at Capital Economics.

U.S. economic indicators have been one of the main market drivers in recent weeks as investors gauge when the Fed is likely to wind down its stimulus.

After a volatile few weeks, Fed officials are trying to calm investors' concerns about the central bank's planned reduction in monthly purchases of financial assets. Those purchases are aimed at stimulating the economy by pushing down market interest rates, and investors worry that as the economy improves, a pullback could deprive them of cheap borrowing rates.

In that vein, the U.S. monthly jobs report due Friday will get huge attention as it is the most closely watched indicator for the world's largest economy.

In Europe, economic indicators remain more mixed. Unemployment across the 17-country eurozone rose to another record high, at 12.1 percent in May. The number shows the massive amount of work governments have to address the social impact that their debt reduction policies have had.

A separate report, however, showed an improvement in manufacturing activity in Britain, France and Italy and stabilization in Spain.

Markets had been buoyed earlier in the day, during Asian trading hours, by the Bank of Japan's closely-watched quarterly "tankan" survey for June. It showed that the index for major manufacturers rose to positive 4 points from negative 8 in March, the first positive figure since September 2011. A positive reading means more companies are optimistic than pessimistic.

The report, along with another survey showing consumer prices stopped falling for the first time in seven months, suggests companies are reacting positively to the weaker yen and Prime Minister Shinzo Abe's policies to revive the economy.

That helped temper concerns by a separate report showing China's manufacturing decelerated in June for a second month. The survey by HSBC Corp. and a Chinese industry group declined to 48.2 points from May's 49.2. The drop reflects in part a tightening in lending conditions as Beijing sought to stabilize the credit market.

Tokyo's Nikkei 225 rose 1.3 percent to close at 13,852.50 while China's benchmark Shanghai Composite Index gained a more moderate 0.8 percent to 1,998.24.

Earlier in Asia, smaller stock markets mostly fell on concern that China's manufacturing slowdown might hurt their economies. Sydney's ASX/S&P 200 lost 1.9 percent to 4,710.30.

Taiwan's Taiex shed 0.3 percent to 8,036 while South Korea's Kospi fell 0.4 percent to 1,855.73. Singapore, Bangkok and Manila gained while Hong Kong was closed for a holiday.

In other markets, the benchmark crude oil contract for August delivery was up $1.12 at $97.68 in electronic trading on the New York Mercantile Exchange.

The dollar gained to 99.67 yen from 99.11 yen late Friday. The euro rose to $1.3061 from $1.3013.

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Joe McDonald in Beijing contributed to this report.