Stock market rise fades on Europe's slump

Mounting evidence that the economy of the 17 countries that use the euro is in recession put paid to any early week buoyancy in European financial markets Monday.

Following gains in Asia on the back of upbeat Chinese manufacturing figures, European stock markets failed to hold on to their early advances as a survey showed the downturn in European manufacturing getting worse and unemployment in the 17 countries that use the euro up at 10.8 percent, its highest level since the euro was launched in 1999.

Having started the second quarter of the year positively, most European markets were trading lower. The CAC-40 in France was 0.3 percent down at 3,412 while the FTSE 100 stock market index of leading British shares was 0.1 percent lower at 5,765. Germany's DAX bucked the trend trading 0.2 percent higher at 5,964. The euro also lost any of its early shine and was trading 0.1 percent lower at $1.3351.

Kathleen Brooks, research director at Forex.com, said stocks will face bigger headwinds in the second quarter as investors concentrate on growth and the future direction of central bank policy.

"While stocks won't fall precipitously, expect some pretty big pullbacks especially in European markets," said Brooks.

Economic indicators around the world will be the primary point of interest in the markets this week, though the monthly interest rate meeting from the European Central Bank will be monitored .

The U.S. will increasingly attract attention in the run-up to Friday's nonfarm payrolls figures for March — the most important piece of economic news later will be the monthly manufacturing survey from the Institute for Supply Management.

Wall Street was poised for a very flat opening, with both Dow futures and the broader S&P 500 futures up 0.1 percent.

Earlier in Asia, stocks had been lifted by buoyant Chinese figures — a run of disappointing data had raised fears that the slowdown in the world's second largest economy would be quicker than predicted. That matters because China has been a crucial prop for the global economy over the past few years.

On Sunday, the state-affiliated China Federation of Logistics and Purchasing said that its purchasing managers index, or PMI, rose 2.1 points to 53.1 in March, up from February's 51.0 and January's 50.5. A reading above 50 signifies expansion.

Though markets in mainland China were closed for a public holiday, the main indexes elsewhere started the second quarter positively. Japan's Nikkei 225 index gained 0.3 percent to close at 10,109.87 despite businesses remaining pessimistic in the central bank's latest quarterly "tankan" survey. Hong Kong's Hang Seng fell 0.2 percent to 20,522.26.

Oil prices tracked European stocks lower, with the benchmark New York rate down 51 cents at $102.51 a barrel.