GLOBAL MARKETS-Shares, euro rattled but sterling drives higher

* Euro, shares dip after mixed European data

* Sterling at trade-weighted five-year high

* HSBC final PMI suggests China manufacturing stable

* Thai stocks, baht skid as protests continue

* Wall Street seen opening flat

By Marc Jones

LONDON, Dec 2 (Reuters) - Evidence that Britain's economy is

accelerating away from its European neighbours drove sterling to

a five-year high on Monday, as signs of backsliding in France

and Spain spooked euro zone stocks.

This week may end up being the final one of the year that

excites investors, with half a dozen top central banks holding

meetings and a barrage of major global economic data on tap

culminating with U.S. jobs data on Friday.

A decent reading on Chinese manufacturing had got markets

off to a largely smooth start in Asia before some mixed signals

from Europe's big economies turned things more lively.

Sterling surged to a five-year high after data showed

UK manufacturing grew at its strongest rate in almost three

years, adding to recent talk that the Bank of England may not be

able to hold off from raising interest rates next year.

At the same, euro zone stocks were sent stumbling by

disappointing equivalent figures from France and Spain that

underscored the ongoing split in fortunes between them and euro

zone powerhouse Germany.

"You have seen the PMIs and some are better than others, but

what is does seem to point to is a diverging European economy,

and that is a bit of a worry," said Michael Hewson, senior

markets analyst at CMC Markets in London.

"There is a lot of U.S. data this week and we are also in

the last month of the year. Investors are going to be reluctant

to take on new risk."

Britain's FTSE 100 was down 0.6 percent ahead of

U.S. trading amid the talk of higher rates, while in the euro

zone, Milan and Madrid suffered from growth

worries as they tumbled 1.3 and 0.9 percent respectively.

Debt and currency markets told a similar story.

Bonds from core euro zone countries Germany and the

Netherlands to those in France, Italy and Spain all lost ground

as did the euro as it hit an 11-month low vs the pound.

The European Central Bank also meets on Thursday, but having

surprised markets by cutting rates last month the bank is

expected to sit on its hands this meeting.

CHINA REASSURES, THAILAND FIGHTS

Futures prices pointed to a flat start for Wall Street after

last week's Thanksgiving festivities.

It was a nervy start to the week on a number of fronts and

investors had plenty of excuses to put a lid on world stock

markets and halt 8 straight weeks of gains on Wall Street.

Thanksgiving sales were seen as disappointing, but it was

geopolitics that grabbed the focus after upheavals in Ukraine

and Thailand escalated over the weekend and tensions continued

between China and Japan over disputed South China sea islands.

China's factory activity was more encouraging. It kept up

steady growth in November boosted by new orders, though the pace

of expansion eased from October, the HSBC/Markit Purchasing

Managers' Index (PMI) showed.

That followed an official survey released over the weekend

showing factory growth held at an 18-month.

"The data broadly says that things are stabilising in

China," said Thomas Lam, chief economist at DMG & Partners

Securities in Singapore.

The Australian and New Zealand dollars rose sharply

following the data highlighting the link to China's fortunes.

In Thailand though, the baht hit a three-month low

and the SET (KOSDAQ: 027040.KQ - news) index tumbled more than 1 percent as

anti-government protesters renewed their fight to topple Prime

Minister Yingluck Shinawatra, prompting riot police to fire

teargas and stun grenades for a second day.

PAYROLLS IN FOCUS

After a soft run in Asia, the dollar rebounded in Europe to

sit at $1.3545 to the euro which was the day's main loser, and

to 102.77 against the Japanese yen.

U.S. ISM manufacturing PMI and employment figures will be

closely scrutinised later and data later in the week also remain

a key focus with the Federal Reserve poised to reduce its

stimulus as soon as it deems the economy strong enough.

Non-farm payrolls for November, due on Friday, will be the

most important. Economists expect an increase of 185,000 jobs

last month, down from 204,000 in October, according to a Reuters

survey of economists.

In commodities trading, gold was down about 1

percent at $1,238 an ounce, undermined by concern a stronger

U.S. economy will lead the Fed to reduce its stimulus. Gold (Other OTC: GDCWF - news) has

lost around a quarter of its value so far this year, on course

for its first annual loss in 13 years.

Copper shed about 0.5 percent to $7,016 a tonne and

Brent crude oil dipped below $110 a barrel as traders

weighed supply outages in Libya against U.S. inventory levels.