(Updates with midday market moves)
* U.S. business activity rises to early 2019 levels
* U.S. home sales rise at record pace for 2nd month in row
* Euro suffers, dollar gains after disappointing European data
* German, French, eurozone PMIs below expectations
NEW YORK, Aug 21 (Reuters) - Upbeat readings on U.S. business activity and home sales helped push global equities and the dollar higher on Friday, counteracting earlier stock declines in Europe. The dollar's gain put it on track to break an eight-week losing streak.
Data firm IHS Markit's purchasing managers' survey released on Friday showed U.S. business activity in August snapped back to the highest since early 2019. The rise came even though new COVID-19 cases remain stubbornly high across the United States.
The flash U.S. Composite PMI Index rose for August to the highest level since February 2019. The flash - or preliminary - indicator for the manufacturing sector stood at its highest since January 2019 and for the services sector it was the highest since March 2019.
Stronger-than-expected U.S. home sales, which rose at a record pace for the second straight month, also pointed to a growing economy.
The Dow Jones Industrial Average rose 146.08 points, or 0.53%, to 27,885.81, the S&P 500 gained 5.78 points, or 0.17%, to 3,391.29, and the Nasdaq Composite added 18.67 points, or 0.17%, to 11,283.62.
Among global shares, MSCI's benchmark for global equity markets was off its lows for the day, up 0.17% at 570.58.
Europe's broad FTSEurofirst 300 index dropped 0.20% to 1,416.57.
A steep rise in jobless claims on Thursday and Federal Reserve minutes on Wednesday suggested the economy was beginning to stall a little bit, said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.
Those "were a little disappointing," Arone said. With elevated risks, investors are seeking safe-havens.
"Investors are exiting some of the more economically sensitive sectors of the market and going back to the old stalwarts of tech, where you get reliable growth," Arone said.
Somber economic numbers earlier in the day in Europe, including euro zone data pointing to a faltering recovery, doused stock market gains in Asia overnight, and also caused the euro to recoil further from recent peaks.
The loss of momentum came after fresh numbers painted a muted economic outlook, with purchasing managers' index releases from France and Germany as well as the wider euro zone falling short of expectations, flagging slowing momentum in the recovery.
"The eurozone flash PMIs for August paint a rather muted picture for the single currency area's nascent economic recovery," said Moritz Degler, senior economist at Oxford Economics.
"The survey contains some strong evidence that the recovery has slowed in August, particularly in the services sector," Degler added.
Analysts pointed to rising infection numbers having tempered economic activity. On Thursday, France experienced a post-lockdown record in new infections, while countries across the region imposed fresh travel restrictions.
News that Pfizer reported positive early data from a potential COVID-19 vaccine and could be on track to seek regulatory review by October did little to brighten the mood.
European bourses had started the day on a brighter note, following gains in Asia after U.S. tech shares closed higher on Thursday. The S&P 500 has rallied 54% from its March low in a world awash with monetary and fiscal stimulus, but money managers are questioning the future trajectory.
"We think equity markets, certain credit markets, and the U.S. dollar have yet to fully reflect the long-term impact of ultra-loose Fed policy," said Mark Haefele, chief investment officer at UBS Global Wealth Management.
In currency markets, the dollar index jumped 0.68%, on track to end what would have been a ninth consecutive weekly decline. Meanwhile the euro extended losses to drop as much as 0.7% to $1.1776, its lowest level in nearly 10 days.
The Japanese yen weakened 0.19% to 105.99 per dollar.
In commodity markets, oil prices were on track for a small weekly loss, with Brent crude futures slipping to $44.29 a barrel and U.S. crude future to $42.24 a barrel.
Gold was a touch softer at $1,935.31 an ounce.
(Reporting by Alwyn Scott and Herb Lash in New York, Karin Strohecker in London and Tom Westbrook in Singapore Editing by Marguerita Choy, David Holmes and Will Dunham)
