The euro briefly strengthened against the dollar and German Bund futures extended losses after data compiler Markit said its March flash composite purchasing managers' index for France jumped to 51.6 from 47.9 last month.
Euro gave up its gains after figures showed private sector growth slowed in Germany. Data from the euro zone as a whole, while suggesting the recovery was becoming more broad-based, dipped compared with February.The French index surged through the 50-point threshold dividing contraction from expansion to hit its highest since August 2011.The FTSEurofirst 300 index fell 0.2 percent as investors focused on a fall in Chinese business activity.
The flash Markit/HSBC China Purchasing Manager index fell to an eight-month low of 48.1 in March from February's 48.5. The index has been below 50 since January.
As the data shows this morning, China's slowdown is sharper than what most people had expected, which fuels worries about the impact on global growth. But Chinese authorities have plenty of tools to avoid a hard landing, and we know that the country's transition to an economic model more focused on consumer spending will lower its growth rate a bit.
A string of weak numbers has reinforced concerns over a slowdown in the world's second largest economy, though the impact on Asian shares was limited as the data raised expectations the Chinese government could stimulate the economy.Which they will not at this point in time.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.8 percent and Japan's Nikkei share average gained 1.8 percent, after solid performances on Wall Street last week, with the Dow and S&P 500 posting weekly gains of 1.5 percent and 1.4 percent.
China's CSI300 index of leading Shanghai and Shenzhen A-share listings rose 0.8 percent in anticipation of stimulus measures.
NATO's top military commander said on Sunday that Russia had built up a "very sizeable" force on its border with Ukraine and Moscow may have another ex-Soviet republic, Moldova, in its sights after annexing Crimea.
Russian shares rose 1.3 percent, rebounding from a fall on Friday, and the rouble gained against the dollar.
There have been no further sanctions imposed over the weekend, investors can more soberly assess the threat of sanctions already imposed. MSCI's main index of emerging stocks rose 1 percent.
The dollar index,ticked up to 80.174. Last week, it hit a three-week high of 80.354.
The euro last stood at $1.3788, all but flat on the day, having hit a high of $1.3875 after the French data. The dollar rose 0.3 percent against the yen at 102.50 yen.
Three-month copper on the London Metal Exchange rose 0.3 percent to $6,496.00 a ton, erasing losses in the immediate wake of the China data.
Spot gold dipped to $1,323.60 an ounce, following a sharp fall triggered by comments last week from Federal Reserve chief Janet Yellen that suggested U.S. interest rates could rise sooner than many in markets had expected.
Brent crude traded at $106.71 a a barrel with supply disruption worries keeping it off a six-week trough of $105.41 hit last week.