Evidence of an economic revival in the euro zone and strong sales from technology bellwether Apple lifted world shares and the euro on Wednesday, offsetting earlier disappointing factory data from China.
Factories in the currency bloc increased output for the first time in well over a year, July's PMI index showed, after activity in Germany and France hit multi-month highs.
The data drove the euro to a one-month high against the dollar, helped extend a rally in European shares <.FTEU3> and sent German bond futures down 0.3 percent.
MSCI's world equity index <.MIWD00000PUS> edged 0.1 percent higher to be up over 9.0 percent since its late-June lows.
Chief economist Chris Williamson of data compiler Markit said the German reading, which came in above the 50 mark that separates growth from contraction, indicated Europe's largest economy could grow by up to 0.4 percent in the third quarter.
"It's a very encouraging picture, it's pretty broad-based. Germany is leading the pack followed by France but even the (euro zone) periphery ... is seeing a return to growth in manufacturing," s Williamson said.
An earlier equivalent reading from China suggested the world's second largest economy was steadily losing momentum, knocking Asian stock markets and contributing to a 55 cent per barrel drop in Brent oil prices to below $108. Brent traded at $108.02 at 0844 GMT.
"This print could reignite fears of a Chinese hard landing," said Annette Beacher, head of Asia-Pacific research at TD Securities in Singapore. "We expect economic growth to continue moderating towards 7 percent."
PILLAR OF SUPPORT
China, which accounts for 40 percent of global copper demand and is a major importer of other raw materials, has been the pillar of support for commodity prices in recent years.
The Australian dollar, heavily exposed to Chinese demand, slipped 0.4 percent to $0.9254, down from a near one-month high of $0.9320.
The U.S. dollar rose 0.4 percent to 99.84 yen, moving away from a one-week low of 99.13 yen touched on Tuesday.
The dollar index <.DXY> extended gains, adding 0.3 percent to 82.153 after skidding to a one-month low of 81.926 on Tuesday.
Worries over a slowdown in China were fanned further when Japan reported exports to its giant near-neighbor had dropped to 4.8 percent in June from 8.3 percent in May.
Apple earlier said revenues from China dived 43 percent from the previous quarter, but that did not prevent it from posting better-than-expected sales and profits after the U.S. market closed on Tuesday, helped by 51 percent sales growth for its iconic mobile phone.
The results lifted company's shares by 5 percent in after-hours trade, saw technology stocks in Europe gain <.SX8P> and helped set the stage for a firmer start on Wall Street when trading resumes later.
(Editing by Catherine Evans, John Stonestreet)