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London: European shares trimmed gains on Thursday afternoon as mixed US economic data cast a shadow on the state of the world’s largest economy.

New orders for long-lasting US manufactured goods in August fell by the most in 3-1/2 years and the final second quarter gross domestic product reading was below expectations .

Partly offsetting that weak data, the number of Americans filing new claims for jobless benefits fell last week to the lowest level in two months, a hopeful sign for a labor market that has struggled to gain traction in recent months.

The pan-European FTSEurofirst 300 index was up 0.4% at 1,103.05 points by 6:04pm, after trading as high as 1,099.11 earlier in the session.

A strong rally in China aided battered European shares on opening, though tensions over the euro zone and end-quarter window dressing were likely to make trade choppy.

Asian markets advanced as investors bet that China, the world’s second-biggest economy, might make take more steps to arrest a slowdown in its economic growth and prop up its beleaguered stock market.

Traders said China’s central bank injected a net 365 billion yuan ($57.92 billion) into money markets this week, the largest weekly injection in history.

Mining stocks, which rely on demand from China, the world’s top metals consumer, rose almost one percent in response. The FTSEurofirst 300 added 0.2%.

“Slightly higher (in Europe) this morning after a terrible performance yesterday on the back of hope that the Chinese authorities will support the stock market now that it is trading at a three year low," said Lex van Dam, hedge fund manager at Hampstead Capital, which manages around $500 million of assets.

“Quarter-end flows will be more important though I think and because equities have done so well this quarter I expect large sell programs to hit the market over the next two days."

Spain fell firmly under the spotlight again, with the country set to announce economic reforms and a tight 2013 budget on Thursday as part of its efforts to cut one of the euro zone’s largest public deficits.

“A bit of a dead cat bounce. It all looks a bit grim... (we’re just seeing) a pause in the selling to see what happens in the budget today," Joe Rundle, head of trading at ETX Capital, said.

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