Greek bonds surged and the euro strengthened against the dollar as Greece announced a plan to buy back up to 10 billion euros ($13 billion) of the country's outstanding debt, while European stocks nudged higher, helped by positive Chinese manufacturing data. The euro hit its highest level in almost six weeks ahead of Greece's latest efforts to reduce its debt pile, and Greek bonds rallied sharply, with yields falling more than a percentage point to 14.94% on the 2023 bond after the country's debt-buyback program was announced. Greece's ASE stock-market index jumped 1.8%. The latest announcement followed Germany's parliamentary approval of a package of fresh Greek support measures on Friday. Elsewhere, basic resources stocks were boosted by the latest Chinese manufacturing data. China's official purchasing managers' index rose to a seven-month high of 50.6 in November, above the 50 mark that indicates an expansion in manufacturing activity, up from 50.2 in October. HSBC's final Chinese PMI reading for November came out at 50.5, up from 49.5 in October. Meanwhile, concerns over crucial U.S. budget negotiations continued to weigh on the markets, according to traders, and will likely remain a headwind for both European markets and the dollar. Billions of dollars in automatic tax hikes and spending cuts are set to begin in January if action isn't taken by U.S. politicians to reach a compromise. Among individual stocks, shares in Cable & Wireless Communications increased 6.6% after the company sold the majority of its businesses within its Monaco and Islands division for an enterprise value of $680 million in cash. Write to Andrea Tryphonides at andrea.tryphonides@dowjones.com or on Twitter @ATryphonides

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