* European shares rise 1.2 pct; oil prices higher
* Euro falls on debt worries ahead of auctions
By Nigel Stephenson
LONDON, Jan 3 (Reuters) - European shares rose on Monday in
the first trading session of 2011, led by German automaker
Porsche, while the euro fell against the dollar on concerns the
euro zone sovereign debt crisis could resurface soon.
German government bond futures rose but pared earlier gains
as stocks bounced and after stronger-than-expected euro zone
manufacturing data.
Gold prices held steady while oil extended its rally above
$92 a barrel on optimism the global economic recovery was
gaining momentum. U.S. Treasuries prices fell sharply,
anticipating stronger U.S. data would support rising yields.
U.S. stock index futures <SPc1> <DJc1> pointed to a higher
open on Wall Street.
"Sentiment is positive and that is mainly because of the
seasonality. Money managers typically get some new inflows at
the start of a year and they put them to work," said Philippe
Gijsels, head of research at BNP Paribas Fortis Global Markets.
With markets in Britain and parts of Asia closed, trade was
very thin.
The FTSEurofirst 300 index <> of top European stocks
was 1.17 percent higher at 1,134.84. Porsche <PSHG_p.DE> rose
nearly 15 percent after a U.S. judge dismissed a lawsuit by
hedge funds seeking more than $2 billion in damages.
Analysts said equity markets were expected to remain
volatile in 2011 as issues including the euro zone debt crisis
resurfaced.
"A lot of the positive news has been priced into equities
and the first half is going to be a bumpy ride for the equity
market," a Germany-based equity strategist said.
The euro dipped against the dollar, with traders and
analysts warning that the euro zone debt crisis, and the year's
first sovereign debt auctions in the bloc, could weigh on the
single currency.
"Bond market spreads could be a bit of a burden for the
euro," said Lutz Karpowitz, senior currency strategist at
Commerzbank in Frankfurt.
He added, however, that data from the U.S. Institute for
Supply Management, due later on Monday, could support the
dollar. The ISM's December non-manufacturing data index is
forecast to rise to 56.9 from 56.6 in November.<ECON>
The euro <EUR=> was last at $1.3315, down 0.4 percent, but
off its lows after higher European shares boosted sentiment. The
dollar index <.DXY>, which measures the greenback against a
basket of currencies, was up 0.4 percent.
DEBT AUCTIONS
Germany and France are scheduled to sell bonds this week and
indebted Portugal sells treasury bills. []
"There's the question of whether things are going to blow up
again with everyone having so much issuance to do and that will
lead to more stresses on the periphery," a debt trader said,
referring to the euro zone's weaker economies.
German Bund futures <FGBLc1> were up, though well off
earlier highs after the rise in stock prices and after the
Markit Eurozone Manufacturing Purchasing Managers' Index was
revised higher to 57.1 from an earlier 56.8. []
Bund futures <FGBLc1> were just eight ticks higher at
125.39, off a high of 125.93 while German 10-year bonds yielded
<DE10YT=TWEB> 2.96 percent, up 1 basis point.
U.S. Treasuries futures <TYv1> were down 24/32 at 119-22/32.
Gold <XAU=> was steady at $1,420.15 an ounce, still close to
a three-week high of $1,421.15 hit on Dec. 31. Silver <XAG=>
rose to a 30-year peak above $31.
U.S. crude <CLc1> traded 77 cents higher at $92.15 a barrel,
just off a session high of $92.20, its highest since October
2008.
(Reporting by London Markets team; Editing by Ruth
Pitchford)
