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* Strong U.S. manufacturing data leads Wall Street rebound * Euro hovers near two-month low vs dollar * Global shares fall as euro zone data disappoints * Lackluster China manufacturing data hits commodities By Herbert Lash NEW YORK, March 1 (Reuters) - Global equity markets fell and the euro slumped to a two-month low on Friday as weak economic data from Europe and China weighed on prices, but Wall Street stocks rebounded on news of surprisingly strong U.S. manufacturing and consumer sentiment. Government bonds rallied and the dollar rose in safe-haven buying as concerns about imminent U.S. spending cuts and the post-election political stalemate in Rome remained major headwinds for assets considered more risky. Growth in U.S. manufacturing, which rose at its fastest pace in over a year and a half in February, offset some jitters. The Institute for Supply Management said its index of national factory activity rose to 54.2 from 53.1 in January, topping economists' forecasts of a pullback to 52.5. While economic data from Europe and China was disappointing, there are clear signs of economic recovery in the United States and some evidence that Japan is beginning to turn around, a potential swing factor in 2013, said Andrew Milligan, head of global strategy at Standard Life Investments in Edinburgh. "We can stand back and have a wider discussion if you wish about politics and markets, and another discussion about whether equity prices have gotten ahead of themselves, but as of Friday it was a most reassuring number," Milligan said of the ISM report. A report showing U.S. consumer sentiment rose in February as Americans were more hopeful that the labor market will improve provided another sign of optimism, even as confidence in fiscal policy was near all-time lows. Stocks on Wall Street opened lower but rebounded after the ISM report and release of the Thomson Reuters/University of Michigan's final reading on consumer sentiment in February. The automatic spending cuts sparked by "sequestration" will take some growth off the U.S. economy but not enough to push it back into recession, Milligan said. Standard & Poor's said it expects the sequester to be temporary and have a mild downside effect on economic growth. A long-term package of spending cuts and revenue increases would be in place by the second quarter, the ratings agency said. The Dow Jones industrial average was up 26.64 points, or 0.19 percent, at 14,081.13. The Standard & Poor's 500 Index was up 2.83 points, or 0.19 percent, at 1,517.51. The Nasdaq Composite Index was up 6.13 points, or 0.19 percent, at 3,166.32. MSCI's all-country world equity index fell 0.24 percent to 353.59. In Europe, the FTSEurofirst 300 of leading regional companies fell 0.24 percent to close at 1168.64. The euro tumbled to a 2013 low against the U.S. dollar, which rose to a six-month high against a basket of currencies as weak euro zone data highlighted a growing economic disparity with the United States. The euro fell to a 2013 trough of $1.2968, its lowest since Dec. 10, and was last down 0.28 percent on the day at $1.3022. The dollar rallied to a session high versus the Japanese yen as an array of data buoyed the safe-haven U.S. currency. The dollar rose as high as 93.68 yen, and last traded at 93.56, up 1.1 percent on the day. U.S. Treasuries prices rose as impending U.S. budget cuts and concern about economic weakness in Europe inspired a bid for safe-haven U.S. debt. Economists say $85 billion in automatic "sequestration" cuts to federal spending, on top of fiscal restraint already in place due to the expiry of the U.S. payroll tax cut, will likely trim U.S. economic growth this year. The benchmark 10-year U.S. Treasury note was up 8/32 in price to yield 1.8532 percent. Crude oil slipped to a six-week low below $110 per barrel, weighed by growth worries as political gridlock brought the prospect of massive U.S. government spending cuts and on disappointing European industrial data. Oil later pared losses. Brent crude for April delivery was down 92 cents to $110.46 per barrel. U.S. oil settled down $1.37 a barrel at $90.68.