Asian stocks fell amid signs of slowing economic growth in China and Japan, and as rising financing costs stoked concern Europe is losing its fight to contain the debt crisis.

Chinese manufacturing may contract for a second month, according to a survey by HSBC and Markit Economics.

A gauge of machinery makers on the Topix Index sank 2.7 percent after the Bank of Japan’s Tankan survey showed sentiment among the nation’s largest manufacturers deteriorated more than economists expected.

Nissan Motor Co. declined 2.8%. Nintendo Co lost 2%.

BHP Billiton Ltd., the world’s biggest mining company, fell 1.8%.

European stocks advanced amid speculation that this year’s slump in equities isn’t commensurate with the outlook for corporate earnings and as economic data from the U.S. and the euro area topped estimates.

Spanish government bonds advanced after the nation sold 6 billion euros ($7.8 billion) of debt at an auction today, more than the maximum target of 3.5 billion euros.

A report showed Germany’s manufacturing industry contracted less than estimated. An index based on a survey of purchasing managers in the manufacturing industry rose to 48.1 this month from 47.9 in November, London-based Markit Economics said today. Economists had expected a drop to 47.5. Readings below 50 indicate a contraction. Germany’s services output unexpectedly rose, the report showed.

In France, the Purchasing & Services Managers’ Index rose to 48.7 in December from 47.3 in November. This topped the average economist estimate for a reading of 47.

Company news:

Insurance companies led the gains. Old Mutual Plc rallied 11% after saying it will sell its Nordic business for $3.3 billion.

Commerzbank AG rose 6.7%. Raiffeisen Bank International AG rallied 5.3%.

U.S. stocks rose as data on jobless claims and manufacturing signaling a strengthening economy overshadowed concern over Europe’s debt crisis.

Eight out of nine  groups in the S&P increased, with utilities, health-care and consumer staples advancing at least 0.9%.

Stocks extended gains this morning after Labor Department figures showed initial jobless claims fell by 19,000 to 366,000 last week, the fewest since May 2008. The median of economists had projected 390,000.

Two reports showed manufacturing in the New York and Philadelphia regions expanded more than forecast in December. The Federal Reserve Bank of New York’s general economic index accelerated to the highest level in seven months, to 9.5 from 0.6 in November. Readings higher than zero signal expansion among companies in region, which covers New York, northern New Jersey and southern Connecticut.

The Federal Reserve Bank of Philadelphia’s general economic index increased to 10.3 in December from 3.6 last month, indicating expansion in the area covering eastern Pennsylvania, southern New Jersey and Delaware.

Equities pared early gains after IMF Managing Director Christine Lagarde said at an event in Washington today that Europe’s “crisis is not only unfolding, but escalating” and cannot be resolved by one group of countries.