European stock markets inched higher on Monday, putting aside concerns over Greece that unsettled the euro after Chinese stocks rallied almost 5 per cent.

An at times dramatic sell-off over the past week in Shanghai, where stocks are still up almost 50 per cent this year, has again focused global attention on financial risks in the world’s second largest economy.

Analysts and traders said Monday’s surge — which came after a handful of lukewarm sentiment surveys that said little positive about the outlook for the economy — showed the market was being driven by speculators rather than economic data.

“The pattern in a bull market is that immediately after a plunge, money will pile in, pushing the market higher,’’ said Wang Yu, analyst at Pacific Securities Co in Beijing.

“To many investors, the rout last week means a huge reduction in market risks, creating new buying opportunities.’’

The CSI300 index of the largest listed companies in Shanghai and Shenzhen rose 4.9 per cent, its biggest one-day rise since December 2012.

The FTSE Eurofirst index of 300 leading European companies was up 0.6 per cent, reflecting gains in all of its major markets. MSCI’s broadest index of Asia-Pacific shares outside Japan was a touch lower after earlier dropping to its lowest intra-day level since April 7.

Major state-backed Chinese newspapers carried front-page articles saying that despite the tumbles last week the foundations of the bull market remain unchanged.

China’s manufacturing PMI

China’s official manufacturing Purchasing Managers’ Index (PMI) edged up to 50.2 from April’s 50.1, matching the expectations of economists polled by Reuters but also suggesting Beijing might have to take additional steps to spur growth.

Separately, the HSBC/Markit PMI came in at 49.2 in May, down for a third month and below the 50-point level that separates an expansion from a contraction in activity. The private survey showed export orders contracted at the sharpest rate in nearly two years.

Greece debt deal

Much attention in Europe was again focused on Greece. The euro has proved relatively robust through a period of unsettling talks between Athens and its creditors, but was down 0.7 per cent on Monday at $1.0915.

That may be as much a reflection of another round of dollar strength over the past 10 days, although the US currency was largely unchanged against the yen and only 0.2 percent higher against sterling.

Deadline missed

Greek and euro zone officials agreed on the need to reach a cash-for-reforms deal quickly as Athens missed a self-imposed Sunday deadline for reaching an agreement to unlock aid.

“It’s difficult to quantify how much the currency market has factored in the possibility of Greece missing the June 5 (IMF loan) repayment deadline,’’ said Shinichiro Kadota, chief Japan forex strategist at Barclays in Tokyo.

“Greek debt yields provide only a rough guide, and although a missed deadline will not spell default, market concern remains high.’’

Oil prices dipped about 0.7 per cent to $65.12.

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