Better-than-expected U.S. economic indicators helped European stocks trim losses and pushed Wall Street higher, easing tensions among investors worried about a downturn in the global manufacturing sector.
Surveys into the state of the industrial sectors _ the purchasing managers' indexes _ showed they had contracted in August in the eurozone and the U.K.
In the eurozone, industrial production had been one of the key pillars of growth in the eurozone, particularly in big exporting economies like Germany's. Coupled with recent statistics showing consumer confidence is waning, the reports suggested growth is likely to slow further in coming months.
In the U.S., a report by the Institute for Supply Management showed the manufacturing sector there grew a little slower in August than the previous month, but didn't contract as some had feared.
Separate data showed that first-time claims for unemployment benefits fell to 409,000 last week, the first decline in three weeks.
The combination of better-than-expected data in the U.S., the world's largest economy, boosted spirits among investors.
After trading lower, Britain's FTSE 100 ended the day 0.5 percent higher at 5,418.65, while France's CAC-40 gained 0.3 percent to 3,265.83. Germany's DAX still closed lower, however, by 0.9 percent at 5,730.63.
U.S. stocks also recovered from early losses to steady. The Dow industrials was up 0.1 percent at 11,625.38, while the broader S&P 500 was 0.1 percent higher at 1,219.94.
The upbeat U.S. data will encourage investors before Friday's important jobs report for August.
The payrolls data are one of the most closely watched economic indicators because they signal the strength and confidence of consumer spending in the world's largest economy. The U.S. economy is expected to have added 80,000 jobs, too little to bring the unemployment rate down.
Earlier in Asia, traders had built on a strong performance on Wall Street the previous day _ driven by hopes that the Federal Reserve may unveil more monetary stimulus _ to push indexes mostly higher.
Some investors were betting that the Fed may announce a third round of government bond purchases _ known as quantitative easing III or QE3 _ to support the economy because of worries the U.S. may slide back into recession. Analysts say a weak U.S. jobs report on Friday could push the Fed to act.
Japan's benchmark Nikkei 225 advanced 1.2 percent to close at 9,060.80 while Hong Kong's Hang Seng edged up 0.2 percent to close at 20,585.33.
South Korea's Kospi was nearly unchanged, ending at 1,880.70 and Australia's S&P/ASX 200 rose 0.3 percent to finish at 4,307.50. Taiwan's benchmark gained but Singapore's declined.
Mainland Chinese shares lost ground Thursday, with the benchmark Shanghai Composite Index slipping 0.4 percent, or 11.3 points, to 2,556.04 while the Shenzhen Composite Index fell 0.6 percent, or 6.59 points, to 1,136.75.
In currencies, the euro dropped to $1.4272 from $1.4380 late Wednesday in New York. The dollar rose to 76.85 yen from 76.60 yen.
Benchmark oil for October delivery rose 9 cents to $88.90 in electronic trading on the New York Mercantile Exchange. Crude rose 9 cents to settle at $88.81 on Wednesday.
In London, Brent crude for October delivery fell 5 cents to $114.80 on the ICE Futures exchange.
Kelvin Chan in Hong Kong and Fu Ting in Shanghai contributed to this report.