The S&P 500 climbed to a fresh four-year intraday high on Monday, the first trading day of the second quarter, as upbeat Chinese and U.S. manufacturing data overshadowed a report showing more weakness in Europe.

The Dow and the Nasdaq held near session highs in afternoon trading.

The U.S. Institute for Supply Management's index of national factory activity rose to 53.4, topping forecasts. A reading above 50 indicates expansion. China's Purchasing Managers' Index hit an 11-month high.

But a report in Europe showed the region's manufacturing sector shrank for an eighth straight month in March, highlighting the difficulties in getting the euro zone economy on track.

The data helped lift energy and basic materials stocks as crude oil and commodity prices climbed. National Oilwell Varco Inc <nov.n> gained 1.8 percent to $80.86 while Freeport McMoRan Copper & Gold Inc <fcx.n> rose 3.4 percent to $39.32. The PHLX oil service sector index <.OSX> was up 1.4 percent. An S&P index of materials stocks <.GSPM> was up 1.5 percent.

The market is telling you it believes the (U.S.) economy has turned around, it has made that corner, it is clearly moving higher - especially compared to Europe and parts of Asia, said Ken Polcari, managing director of ICAP Equities in New York.

The Dow Jones industrial average <.DJI> gained 76.48 points, or 0.58 percent, to 13,288.52 The Standard & Poor's 500 Index <.SPX> rose 12.52 points, or 0.89 percent, to 1,420.99. The Nasdaq Composite Index <.IXIC> added 27.85 points, or 0.90 percent, to 3,119.42.

Stocks ended their strongest quarter in more than two years on a positive note on Friday. The advance was led by recently underperforming sectors like energy and health care.

Equity markets will be closed for the Good Friday holiday, which could create lighter volume and increase volatility this week. Despite the holiday, the government will release the March payrolls report on Friday. With that in mind, investors could be hesitant to make big bets ahead of the data.

Beauty company Coty Inc offered to buy cosmetics direct seller Avon Products Inc <avp.n> for $23.25 a share, a 20 percent premium over Friday's closing price. Avon jumped 16.5 percent to $22.55 in afternoon trading.

For the first quarter, the S&P 500 gained 12 percent - its best start of the year since 1998, and the best overall quarter since the third period of 2009.

(Reporting by Chuck Mikolajczak; Editing by Jan Paschal)

Manufacturing