LONDON World stocks mostly swung higher Friday after a survey showed China's manufacturing production rose to a 14-month high, offsetting gloom from a sharp drop in Japanese business confidence.
European markets were less upbeat after Standard & Poor's lowered its credit outlook on Britain, meaning there is a one in three chance the country could lose its top credit rating over the next year.
By late morning in Europe, Britain's FTSE 100 was down 0.1 percent to 5,923.41 while Germany's DAX rose 0.2 percent to 7,597.71. France's CAC-40 was flat at 3,641.82 after Fitch, another credit ratings agency, affirmed the country's own top rating.
Investors largely shrugged off agreements reached Thursday by European Union finance ministers: a compromise to create a single supervisor for banks and an agreement to give Greece desperately needed bailout funds. The decisions, while important to end the continent's crisis, had been expected.
Wall Street was headed for a higher opening Dow Jones industrial futures rose 0.2 percent to 13,126 and S&P 500 futures advanced 0.2 percent to 1,415.30.
Earlier Friday, HSBC Corp. released its preliminary China Purchasing Managers' Index for December, which rose to 50.9 from November's 50.5. Numbers above 50 represent an expansion of manufacturing.
The improvement in Chinese manufacturing activity suggests global consumer spending may be recovery from a weak patch this year.
"I think it adds further encouragement that China is moving in the right direction," said Andrew Sullivan, an independent analyst based in Hong Kong.
Hong Kong's Hang Seng pulled out of negative territory to advance 0.7 percent to 22,605.9. Mainland Chinese shares posted sharp gains, with the Shanghai Composite Index surging 4.3 percent to 2,150.63. The smaller Shenzhen Composite Index shot up 4.2 percent to 816.19.
Japan's Nikkei 225 index sank slightly following the release of a Bank of Japan survey which showed large Japanese manufacturers are more pessimistic about business conditions. The "tankan" index for the December quarter dropped from September's minus three to minus 12, much worse than expected.
The benchmark in Tokyo fell 0.1 percent to close at 9,737.56, a day after closing at an eight-month high. A weakening yen helped export shares, with Japan's Fujitsu Ltd. surging 6.8 percent and Sharp Corp. jumping 7.6 percent.
South Korea's Kospi fell 0.4 percent to 1,995.04. Benchmarks in Indonesia, the Philippines and Taiwan also fell. Australia's S&P/ASX was nearly unchanged at 4,583.10.
Meanwhile, investors are keeping a close eye on budget talks in Washington between President Barack Obama and key Republican lawmakers.
A deal must be reached by the end of the year to avoid what has been dubbed the "fiscal cliff" hundreds of billions of dollars in automatic spending cuts and tax increases that could plunge the world's largest economy back into recession.
Benchmark crude was up 90 cents to $86.79 per barrel in electronic trading on the New York Mercantile Exchange. The contract lost 88 cents to end at $85.89 per barrel in New York on Thursday.
In currencies, the euro rose to $1.3083 from $1.3075 late Thursday in New York. The dollar rose to 83.76 from 83.58 on expectations that Sunday's parliamentary election will usher in a government committed to a weak currency.