New York (AFP) - European stocks finished lower Monday on poor Chinese data and a drop in oil prices, while US stocks held most of their gains following last week's rally.
Stocks were in retreat after a key gauge of Chinese factory activity hit a three-year low, halting the momentum from Friday's big rally after the Bank of Japan's shock announcement to implement negative interest rates.
Frankfurt, London and Paris all ended the day down around 0.5 percent.
US stocks also spent most of the session in the red before pulling into positive territory in the last hour of trade. In the end, the S&P 500 ended down less than a point.
Analysts were relieved the market avoided a sell-off after big gains Thursday and Friday, suggesting fewer investors are looking to exit holdings at any sign of a rebound.
"The market may be stabilizing," said Mace Blicksilver, director of Marblehead Asset Management. "I'm not ready to say the market is going back to the December highs."
The performance in the US came despite lackluster US economic data, with reports showing manufacturing activity contracted for the fourth straight month in January and flat consumer spending for December.
"It's a pretty constructive performance," said Michael James, managing director of equity trading at Wedbush Securities. "The bulls are standing firm and the market is acting pretty well today."
- Chinese, Japanese divergence -
In another example of weakness in China's economy, the official Purchasing Managers Index showed the manufacturing sector shrank in January for the sixth straight month and was now at its weakest since August 2012.
Worries about the slowdown in the world's second biggest economy -- and its leaders' handling of it -- were among the key reasons for a rout across global markets in January that wiped trillions of dollars off valuations.
The manufacturing slowdown "points to weaker growth momentum", said Yao Zhang, China economist at Nomura Holdings in Hong Kong. "We believe economic growth may start to lose steam again, after stabilising a little."
Traders cautioned that trading would remain muted in Asia this week ahead of the Chinese lunar New Year holiday.
Shanghai ended 1.8 percent lower on Monday and Hong Kong closed down 0.5 percent.
However, Tokyo soared two percent, extending a 2.8-percent gain on Friday following the shock announcement from the BoJ that it would effectively start charging lenders to park their cash with it.
The move was intended to expand lending to people and businesses in order to kickstart the economy and fend off deflation.
Adding to the upward pressure in the Japanese market was a 12.4-percent surge in Sony, which on Friday posted a nine-month net profit of almost $2.0 billion thanks to huge demand for its PlayStation video game consoles and image sensors.
In Helsinki, shares of telecom giant Nokia tumbled by more than 11 percent after it announced a patent dispute settlement with South Korea's Samsung whose terms disappointed investors.
Google parent Alphabet rose 1.2 percent during trade and then another 5.5 percent after hours when it reported that fourth-quarter earnings rose 5.3 percent to $4.9 billion. The post-session gains pushed Alphabet ahead of Apple to be the world's largest publicly traded company by market value.
- Key figures at 2200 GMT -
New York - Dow: DOWN 0.10 percent at 16,449.18 (close)
New York - S&P 500: DOWN 0.04 percent at 1,939.38 (close)
New York - Nasdaq: UP 0.14 percent at 4,620.37 (close)
London - FTSE 100: DOWN 0.39 percent at 6,060.10 (close)
Frankfurt - DAX 30: DOWN 0.41 percent at 9,757.88 (close)
Paris - CAC 40: DOWN 0.56 percent at 4,392.33 (close)
EURO STOXX 50: DOWN 0.79 percent at 3,021.01 (close)
Tokyo - Nikkei 225: UP 1.98 percent at 17,865.23 (close)
Shanghai - Composite: DOWN 1.78 percent at 2,688.85 (close)
Hong Kong - Hang Seng: DOWN 0.45 percent at 19,595.50 (close)
Euro/dollar: UP at $1.0893 from $1.0831 Friday
Dollar/yen: DOWN at 120.96 yen from 121.12 yen