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Solid figures from China, Europe shore up markets

Investors look at the stock price monitor at a private securities company in Shanghai, China, Wednesday, Aug. 21, 2013. Asian stock markets were choppy Wednesday as traders waited for hints from the U.S central bank about when it will begin to reduce its massive stimulus effort. (AP Photo)

LONDON (AP) -- Solid economic figures from China and Europe lifted the mood in financial markets Thursday in a week when investors have been mainly worried over when the U.S. Federal Reserve will start to reduce its monetary stimulus.

Though the minutes to the last Fed policy meeting, published Wednesday, showed most officials appeared comfortable with the idea of starting to reduce the stimulus this year, there was less clarity over whether the so-called tapering will begin in September or December. The Fed has been purchasing $85 billion of financial assets a month to lower interest rates and spur growth.

Figures out of China and Europe helped investors to focus on something different — that two of the global economy's pillars are strengthening.

"Better economic data in Europe and China are providing a boost to sentiment," said Benjamin Reitzes, an analyst at BMO Capital Markets.

The good news started in China, with a survey from HSBC providing further evidence that China, the world's second-largest economy, may be over its recent soft patch. Its monthly purchasing managers' index — a gauge of business activity — rose to 50.1 points for August from July's 47.7. Numbers above 50 indicate an expansion in activity.

Then, the monthly composite PMI, which includes both manufacturing and services, for the 17-country eurozone rose to 51.7 in August from 50.4. The index, published by financial information company Markit, is at its highest level since June 2011 and provides further evidence that the eurozone recovery from recession is gathering pace.

In Europe, the FTSE 100 index of leading British shares closed up 0.9 percent at 6,446.87 while Germany's DAX rose 1.4 percent to 8,397.89. The CAC-40 in France ended 1.1 percent higher at 4,059.12.

In the U.S., the Dow Jones industrial average was up 0.3 percent at 14,939 while the broader S&P 500 index rose 0.6 percent to 1,653. The gains came despite a modest 13,000 uptick in weekly jobless claims to 336,000.

Analysts were unconcerned, as claims remain near their lowest levels in over five years.

"An unexciting weekly report but one that keeps the labor market in the right zone to feel the glow of ongoing job creation," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co.

On Wednesday, U.S. stocks had a volatile day as investors digested the Fed minutes. After dropping sharply, they recovered to briefly trade higher before ending up modestly down. The dollar was also volatile as traders assess the economic news in the context of the Fed tapering.

The euro was 0.2 percent higher at $1.3362 while the dollar rose 0.7 percent to 98.49 yen.

Earlier in Asia, Hong Kong's Hang Seng advanced 0.4 percent to 21,895.40. Japan's Nikkei 225 index fell 0.4 percent to 13,365.17 while South Korea's Kospi lost 1 percent to 1,849.12.

The benchmark index in the Philippines dived 6 percent, catching up with earlier losses in regional markets after being closed due to flooding that submerged large parts of the capital Manila.

Oil prices edged higher, with the benchmark New York rate up 45 cents at $104.30 a barrel.