GLOBAL MARKETS-Business pickup fuel gains in shares and oil

* European shares gain as PMI data fuels recovery hopes

* Chinese PMI improves from December, supporting sentiment

* Apple's disappointing result hits tech stocks

* Yen extends weakness against dollar and euro

By Richard Hubbard

LONDON, Jan 24 (Reuters) - European shares recovered from a weak start while the euro and commodities rose on Thursday after business surveys for January showed Germany leading a recovery across the euro zone and a pickup in activity at Chinese factories.

The euro zone data pointed to further contraction across the recession-hit region, but also fuelled hopes the downturn could end by the middle of the year, which have been behind a rally in European equities and peripheral bonds this year.

"Germany is roaring back to growth and looks like it is dragging the euro zone out of recession," said Christian Schulz, senior economist at Berenberg Bank.

The Markit Flash Composite Eurozone Purchasing Managers' Index, (PMI), which surveys around 5,000 firms and is seen as a leading indicator of economic activity, jumped to 48.2 from December's 47.2, smashing expectations for a rise to 47.5.

Europe's FTSEurofirst 300 index of top company shares was up 0.1 percent to 1,168 points after the data, not far from a peak of 1,170.29 points hit two weeks ago, its best level since early 2011.

The index had started weaker after disappointing earnings figures from the world's largest technology company, Apple , released after U.S. markets had closed, hurt tech stocks.

Meanwhile separate German PMI data, showing private-sector activity running at its highest level for a year after a slowdown in the fourth quarter of 2012, left Frankfurt's DAX little changed.

However signs that France, Europe's second-biggest economy, may have slipped into a recession, failed to dampen Paris's CAC-40 index which rose 0.3 percent.

Berenberg's Schulz said the divergence between the German and the French performance, along with increasing evidence that Italy and Spain were improving, had highlighted the need for further reforms in the French economy.

Meanwhile a surge in mining stocks linked to the better Chinese data lifted London's FTSE 100 by 0.35 percent.

China's HSBC flash purchasing managers' index (PMI) rose to 51.9 in January to a two-year high, signalling a rebound in manufacturing activity and confirming a recovery in growth in the world's second-largest economy was on track.


U.S. futures prices pointed to a falls when trading resumes on Wall Street after the weak results from Apple, whose stock fell 10 percent in after-hours trade, wiping out some $50 billion of its market value.

The results had earlier fanned earnings worries at Apple's component suppliers in Asia, leading to a drop of about 0.4 percent in MSCI's broadest index of Asia-Pacific shares outside Japan.

In the currency markets, the euro zone PMI data sent the region's common currency up 0.1 percent against the dollar at $1.3322, not far from $1.3404, a 11-month high hit on Jan. 14. It also rose 1.2 percent against the yen to touch 119.58 yen, inching back towards a 20-month high.

"The euro dipped on French numbers and was up on the German data. On the whole there is positive sentiment for the euro but we need more hard data to lift euro above $1.34," said Niels Christensen, FX strategist at Nordea.

Analysts said an influential German ZEW survey due on Friday along with an announcement on how much of the loans taken by banks from the European Central Bank a year ago they plan to repay would sway the euro in the coming days.


Elsewhere the weakness of the Japanese yen gathered pace after Prime Minister Shinzo Abe said he expected the Bank of Japan to achieve a new 2 percent inflation goal announced earlier this week as soon as possible.

After the comments the dollar rose 1.15 percent to hit a high of 89.65 yen, pulling away from a one-week low of 88.06 yen hit the previous day.

The rise in the Chinese PMI data fuelled confidence in the pace if its economic recovery, helping keep oil above $112.70 a barrel, copper broadly steady at $8,083 a tonne, while gold drifted at $1,681.

Market participants are also waiting for a U.S. Federal Reserve policy meeting next week, which could shed light on the future of its ultra-loose monetary policy.

"We have the FOMC (Federal Open Market Committee) and non-farm payrolls data, which could shake this market out of its technical trading doldrums," said a Singapore-based metals trader.