LONDON—European stock markets started December on an upbeat note as Greece took steps to reduce its debts and investors bought mining stocks in response to encouraging manufacturing data from China.
Early gains faded late in the day as a snapshot of activity at U.S. factories came in less strong than expected.
The Stoxx Europe 600 index closed up 0.1% at 276.13. The U.K.'s FTSE 100 ended up 0.1% at 5871.24, France's CAC-40 rose 0.3% to 3566.59 and Germany's DAX added 0.4% to 7435.21.
"We've seen progress on Greece today and the view is that the euro zone is going to survive. That gives a greater level of confidence, which has been a critical issue," said Justin Urquhart Stewart, co-founder of Seven Investment Management.
Greece said Monday it would spend €10 billion, or nearly $13 billion, to buy back bonds at a price range that was higher than investors expected. The news follows Germany's parliamentary approval of a package of fresh Greek support measures on Friday.
The euro gained ground and Greek government bonds rose to their highest levels since the debt restructuring in March. The main Greek stock index, the ASE composite, closed up 1.3% at 819.39.
The release of purchasing managers' indexes for China and Europe lent early strength to the market. The HSBC China Manufacturing Purchasing Managers Index reached a 13-month high of 50.5 in November, up from 49.5 in October. That mirrored an improvement in China's official manufacturing PMI, released Saturday, which rose to a seven-month high of 50.6 in November from 50.2 in October.
In Europe, Markit's manufacturing PMI rose to 46.2 in November from 45.4 in October, unchanged from an earlier estimate. The reading marked the highest level in eight months, although it suggested that the downturn in European manufacturing extended into a 16th month.
In the U.S., however, the Institute for Supply Management reported its purchasing managers' index fell to 49.5 last month from 51.7 in October. Economists had expected a slight decline to 51. Readings below 50 indicate contracting activity.
In European stock action, shares of Cable & Wireless Communications rose 1.2%, after the firm said it has agreed to sell a chunk of its Monaco & Islands division for $680 million in cash.
In France, shares of Renault lost 1.3% and Peugeot fell 1.9%, after data showed new car registrations in France dropped 19% in November compared with the same month last year.
In France, shares of European Aeronautic Defence & Space rose 2.1%, as France and Germany agreed to a plan that will give each a 12% voting stake in the firm.
Mining stocks posted some of the biggest gains on Monday. Shares of Rio Tinto rose 0.9% and those of Anglo American gained 0.6%. Metals prices were also mostly higher.
Among commodities, light, sweet crude for January delivery was up $0.25 at $89.16 on the New York Mercantile Exchange as European markets closed, while Comex gold for February delivery was up $4.60 at $1717.30.
The euro hit its highest level in almost six weeks. Monday afternoon in New York, the currency was at $1.3059, compared with $1.2987 late on Friday.
Write to Michele Maatouk at michele.maatouk@dowjones.com
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