The death of al-Qaida leader Osama bin Laden gave stock markets a brief fillip Monday but the gains were muted as traders positioned themselves for a raft of key economic news in the coming days.
United States President Barack Obama's announcement that the man who inspired the deadly Sept. 11, 2001, terror attacks in the United States had been killed in a special forces operation in Pakistan prompted an increase in investors' appetite for risk. That usually manifests itself in stock market gains and dollar declines.
However, the sheen wore off over the day as investors turned their gaze to the week's economic news. Trading levels were also fairly muted, partly because a number of markets were closed, including those in Britain, China and Hong Kong.
In Europe, the CAC-40 in France closed up 0.1 percent higher at 4,108.77 while Germany's DAX rose 0.2 percent to 7,527.64. In the U.S., the Dow Jones industrial average was trading 0.3 percent higher at 12,844 around midday New York time while the broader Standard & Poor's 500 futures rose 0.2 percent to 1,367.
Analysts said the knee-jerk move higher in the immediate aftermath of the news of bin Laden's death has largely run its course. More fundamental matters, such as the state of the global economic recovery and how central banks respond to the threat of higher inflation, remain the main drivers.
"It seems fanciful to accept that global equity markets had been restrained for a decade for fear that Osama bin Laden might pull off another terror attack somewhere around the globe," said Andrew Wilkinson, senior market analyst at Interactive Brokers. "The world economy has lived through two recessions since 9/11."
This week is awash with key economic developments that could have a huge bearing on all types of markets.
In the U.S., the run of economic data started off brightly with the monthly manufacturing survey from the Institute for Supply Management. Its main indictor may have dipped to 60.4 in April from 61.2 in March, it's still at historically high levels and indicates that the manufacturing sector is continuing grow strongly _ any reading above 50 indicates expansion.
"This was a positive report and a positive development for market sentiment, reflecting strength in the manufacturing sector and continued recovery in the U.S. economy," said Michael Woolfolk, an analyst at the Bank of New York Mellon.
The U.S. economic news week culminates Friday with the April nonfarm payrolls data from the U.S. government. That often sets the tone in markets for a week or two.
In Europe, investors will be keeping a close watch on interest rate decisions from the European Central Bank and the Bank of England. Neither is expected to change interest rates though the ECB is expected to indicate Thursday that it will follow April's first interest rate increase in nearly three years with another rise in June.
The monthly manufacturing purchasing managers' index _ a broad gauge of activity _ for the 17 countries that use the euro was revised up to 58 in April from the initial estimate of 57.7 _ April's reading indicated the sector was enjoying its second-strongest monthly pace of expansion since August 2000.
That belief has helped bolster the euro currency over the past couple of months despite ongoing debt problems, most notably in Greece, Ireland and Portugal. While the ECB is poised to raise interest rates again in the coming months, the U.S. Federal Reserve has shown few signs that it's getting ready to lift its super-low interest rates and that's added to the dollar's recent weakness against the euro.
By late-afternoon London time, the euro was 0.6 percent higher at a near 18-month high of $1.4890 while the dollar was 0.1 percent lower at 81.14 yen.
Elsewhere, oil prices rose to their highest levels since mid-2008 on hopes over the global economic recovery despite earlier falling in the immediate wake of bin Laden's death. Benchmark crude for June delivery was up 40 cents at $114.33 a barrel in electronic trading on the New York Mercantile Exchange.
Kelly Olsen in Tokyo contributed to this report.