GLOBAL MARKETS-Dollar gains, U.S. shares pare losses on data
* Strong U.S. manufacturing data leads Wall Street rebound
* Euro hovers near 2-month low vs dollar
* Shares fall as euro zone data disappoints
* Lacklustre China manufacturing data hits commodities
NEW YORK, March 1 (Reuters) - Global equity markets fell sharply and the euro slumped to a two-month low on Friday as weak economic data from Europe and China weighed on sentiment, but Wall Street pared losses to trade flat on news of surprisingly strong U.S. manufacturing. Concerns about imminent U.S. spending cuts and political stalemate in Rome remained major headwinds for risky assets, though the pace of growth in U.S. manufacturing to its fastest rate in over a year and a half in February eased some jitters. The Institute for Supply Management (ISM) said its index of national factory activity rose to 54.2 from 53.1 in January, topping economists' forecasts for a pullback to 52.5. "A very impressive ISM number with the only caution being a decline in employment though still in expanding territory," David Ader, head Of government bond strategy at CRT Capital Group in Stamford, Connecticut. Another sign of optimism was a report that showed U.S. consumer sentiment rose in February as Americans were more optimistic that the jobs market will improve, even as confidence in fiscal policy was near all-time lows. The Dow Jones industrial average was down 26.48 points, or 0.19 percent, at 14,028.01. The Standard & Poor's 500 Index was down 4.20 points, or 0.28 percent, at 1,510.48. The Nasdaq Composite Index was down 17.09 points, or 0.54 percent, at 3,143.10. MSCI's all-country world equity index fell 0.45 percent to 352.82. In Europe, the FTSEurofirst 300 of leading regional companies fell 0.36 percent to 1167.22. 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 $1.2979, its lowest since at least Dec. 11, down 0.57 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 6/32 in price to yield 1.8601 percent. Crude oil slipped to a six-week low below $110 per barrel, weighed down 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 fell 90 cents to a low of $110.48 per barrel. U.S. oil fell to a low of $90.98, down $1.07.