By Nigel Stephenson
LONDON (Reuters) - European stocks and the euro rose on Monday after slightly stronger than expected German factory activity data outweighed gloomy numbers from China and ECB officials threw into doubt expectations of more stimulus to come as soon as next month.
Activity in Germany's powerful manufacturing sector dipped last month, compared with September, but beat economists' early estimates. Similar data for the euro zone as a whole also topped preliminary numbers.
That helped push European stocks, which had opened deep in negative territory after further evidence of economic slowdown in China, up on the day.
The pan-European FTSEurofirst 300 stocks index was last up 0.3 percent, with Germany's Dax up 0.9 percent.
The U.S. S&P500 index looked set to open modestly higher, according to futures markets.
Traders also cited remarks from European Central Bank chief Mario Draghi, who told Italian daily Il Sole 24 Ore on Saturday the bank would do whatever was needed to keep its inflation target on track but that it remained an open question whether further stimulus would be necessary.
Another ECB policymaker, Ewald Nowotny, said in a interview on Monday that the central bank should think very carefully before stepping up its bond-buying programme.
The euro nudged higher against the dollar and euro zone bond yields rose across the board.
Draghi said after the ECB's last policy meeting 10 days ago that the central bank could introduce new stimulus measures as soon as December and was considering cutting its deposit rate.
"The market got a bit caught offside...It seemed to be of the opinion that it was a done deal but clearly there are factors that still need to come into play," Credit Agricole strategist Orlando Green said.
Earlier, Asian shares, as measured by MSCI's main Asia-Pacific index, hit their lowest level in almost three weeks after two surveys showed Chinese factory activity slowing.
The private Caixin purchasing manager's index showed activity declined for an eighth consecutive month. An official PMI survey on Sunday showed manufacturing unexpectedly contracted in October for a third straight month.
The figures helped push down the dollar and crude oil and drove copper to a one-month low.
Chinese shares also fell on concern about the weak economy. The CSI 300 index of largest listed companies in Shanghai and Shenzhen closed 1.6 percent lower and the Shanghai Composite index lost 1.7 percent.
Japan's Nikkei closed down 2.1 percent.
Worries over global growth, particularly in China, have rattled financial markets in recent weeks, despite steps by the Chinese authorities to stimulate the economy.
The prospect of higher U.S. interest rates, after the Federal Reserve left the door open last week to a first increase since 2006 in December, has also clouded the outlook.
The dollar was down 0.1 percent against a basket of its peers. The euro was up 0.1 percent at $1.1014 while the yen was flat at 120.60 per dollar.
Euro zone bond yields rose. German 10-year yields rose 4.5 basis points to 0.57 percent. Italian and Spanish equivalents rose 5.3 and 5.8 bps to 1.54 and 1.74 percent respectively.
Oil prices fell on the prospect of weak Chinese demand and record-high Russian production. Brent crude was last down 87 cents a barrel at $48.70.
Copper hit a one-month low of $5,086.50 a tonne before recovering to $5,116, up 0.1 percent on the day.
Gold hit a four-week low of $1,134.60 an ounce on bets the U.S. Federal Reserve would raise interest rates next month. It last traded at $1,137.86
Turkish markets surged after the Islamist-rooted AK Party won a clear majority in Sunday's parliamentary election.
Istanbul stocks rose more than 5 percent and the lira rose to its highest since late July and was last up 3.6 percent at 2.809 per dollar.
"The markets have been yearning for a period of political stability in Turkey for quite some time now. To all intents and purposes this is the best result that the markets could expect," said Nicholas Spiro, managing director of Spiro Sovereign Strategy.
(Additional reporting by Shinichi Saoshiro and Hideyuki Sano in Tokyo, Jamie McGeever and Anirban Nag in London, David Dolan and Daren Butler in Istanbul; editing by Richard Balmforth)
