Stocks surge on first trading day of 2012

Stocks rose sharply on the first trading day of 2012 as upbeat U.S. economic data overshadowed continuing concerns about the European debt crisis.

The Dow Jones industrial average was up 240.45 points, or 2%, to 12,458.01 in early trading Tuesday. The Standard & Poor’s 500 index was up 2%.

The market opened higher after the Institute for Supply Management reported Tuesday that its monthly index of manufacturing activity rose in December, marking its third straight increase and providing more evidence that the U.S. economy is in recovery mode.

“This sits comfortably with other data suggesting that the economy is gaining traction,” Paul Dales, an economist with Capital Economics, wrote to clients.

Also Tuesday, the Commerce Department said construction spending rose more than expected in December.

The rest of the week will provide more data on the U.S. economy, including car sales Wednesday and the December jobs report Friday.

Europe continues to provide reasons for investors to worry. A Greek official warned Tuesday that the country could abandon the euro currency if European leaders do not follow through on their bailout for the struggling country.

Still, there are no immediate signs of a deepening crisis abroad as the new year begins. Stock markets in Europe rallied Tuesday, with key indexes gaining 1.6% in Germany and 2% in Britain.

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