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US and European shares nudged higher Monday as momentum from last week was restrained by weak eurozone economic data.
Stock markets rallied last week after the US Federal Reserve announced a bumper interest rate cut, its first since 2020, as inflation is cooling.
London and Paris closed slightly higher Monday, while Frankfurt gained a healthier 0.7 percent. In New York, all the main indexes were marginally higher in late morning trading.
"Visions of further rate cuts remain a supportive factor," said Patrick O'Hare, an analyst at Briefing.com.
But, he added, "there is some appreciation for the possibility that a market trading with a rich valuation could experience a consolidation period."
Investors are also uncertain how fast the Fed will follow up with further cuts.
This Friday's release of the personal consumption expenditures index, the Fed's preferred inflation metric, could shed light on the next rate move, as could several planned speeches this week by Fed members.
Traders in Europe juggled reports showing that eurozone business activity declined for the first time in seven months in September with expectations that the weak data raises the chance the European Central Bank could speed up its own rate cuts.
"PMI data for France and Germany was weak across the board,' said Kathleen Brooks, research director at XTB.
S&P Global's purchasing managers' index (PMI) -- a key gauge of the overall health of the economy -- dropped to 48.9 in September, down from 51 in August. Any reading below 50 indicated contraction.
Renewed expectations of rate cuts from the ECB supported continental shares, despite the weak data.
"The September PMI data could add some urgency to ECB rate cuts for the rest of this year," said Brooks.
In company news, the German government said it would oppose a takeover of Commerzbank after Italian lender Unicredit raised its stake in the German bank to 21 percent, making it the largest shareholder.
Unicredit fell 3.9 percent in Milan and Commerzbank closed down 3.8 percent in Frankfurt.
The euro fell against the dollar as the weak European data raised the odds that European rates could fall faster than their trans-Atlantic counterparts.
In Asia, Shanghai rose as China's central bank cut its 14-day lending rate, raising hopes for more growth-boosting measures in the world's second-largest economy.
Hong Kong shares dipped while Tokyo was closed for a holiday.
Stocks in Colombo fell after self-avowed Marxist Anura Kumara Dissanayaka won Sri Lanka's presidential election, fuelling worries about a $2.9 billion International Monetary Fund bailout that demands steep tax hikes and other austerity measures.
Oil prices slipped as concerns about slower Chinese demand outweighed worries over an escalation of the conflict in the Middle East after Israel struck Lebanon on Monday.
Gold sat around record highs around $2,650 after the Fed rate cut, which makes the precious metal more attractive to traders, and on geopolitical concerns.
New York - Dow: UP 0.1 percent at 42,122.12 points
New York - S&P 500: UP 0.3 percent at 5,721.53
New York - Nasdaq Composite UP 0.3 percent at 17,998.97
London - FTSE 100: UP 0.4 percent at 8,259.71 (close)
Paris - CAC 40: UP 0.1 percent at 7,508.08 (close)
Frankfurt - DAX: UP 0.7 percent at 18,846.79 (close)
Tokyo - Nikkei 225: Closed for a holiday
Hong Kong - Hang Seng Index: DOWN 0.1 percent at 18,247.11 (close)
Shanghai - Composite: UP 0.4 percent at 2,748.92 (close)
Pound/dollar: UP at $1.3354 from $1.3316 on Friday
Euro/dollar: DOWN at $1.1135 from $1.1160
Dollar/yen: DOWN at 143.89 yen from 144.02 yen
Euro/pound: DOWN at 83.38 pence from 83.80 pence
Brent North Sea Crude: DOWN 0.4 percent at $74.20 per barrel
West Texas Intermediate: DOWN 0.3 percent at $70.76 per barrel
gv/cw
