By Jeremy Gaunt, European Investment Correspondent
LONDON, July 1 (Reuters) - Investors put the Greek crisis behind them at least temporarily on Friday, letting the euro hit a three-week high against the dollar at one point, as they focused instead on the state of the world economy.
Stocks were higher globally, but Europe slipped after four days of gains. Wall Street looked set for small gains.
China's factory sector grew at its slowest pace in 28 months in June as new orders expanded less quickly, with weaker global demand and tight monetary policy at home pinching production.
The U.S. economy, however, was providing a rare boost. Midwest business activity showed surprising strength in June, lifted by a jump in new orders, according to the Institute for Supply Management-Chicago said.
Weak euro zone manufacturing surveys had little impact.
"Positive global economic data including from the United States and progress in Greece on its debt problems are stoking appetite for stocks today," said Lee Sun-yeb, a market analyst at Shinhan Investment Corp, looking at the global picture.
Data from Reuters asset allocation polls on Thursday suggested that investors were entering the third quarter in a cautious mood. But they raised their equity holdings in June for the first time since January.
The big asset winners in the first half were primarily commodities as well as high-yield bonds. MSCI data showed developed stocks returning 5.6 percent over the first half -- capital gain plus dividends -- and emerging markets just 1 percent for the first half.
Greece's passage of an austerity plan during the week, opening the door to a tranche of new bailout money, has allowed investors to put immediate concerns about default and debt crisis contagion to one side.
There's relief Greece hasn't gone bad. But there's also nervousness, as we look to see whether the U.S. consumer is showing more confidence or not," said Justin Urquhart Stewart, director at Seven Investment Management.
MSCI's all-country world stock index was up 0.1 percent, heading for a 4 percent or more weekly gain. Emerging markets gaining around half a percent and Japan's Nikkei closing up half a percent.
The FTSEurofirst 300 was flat.
EURO GAINS
The euro hit a three-week high against the dollar, but later slipped back to flat.
It rose as high as $1.4553 according to electronic trading platform EBS, its highest since early June. The euro has rallied some 3 percent from Monday's trough around $1.4100.
"The market is bullish on risk and looking to buy euros," said Paul Mackel, director of currency strategy at HSBC. "It could rise to $1.47 against the dollar if the data pulse from the U.S. keeps getting better. The Greek issues still linger, but there is a bit of calm now with the markets' focus on data."
Core euro zone government bonds were flat. (Additional reportintg by Anirban Nag And Brian Gorman.; Written by Jeremy Gaunt; Editing by Toby Chopra)