CORRECTED - CORRECTED-RPT-GLOBAL MARKETS-Asia stocks gain on China hopes, US

                                
 (Corrects fourth paragragh to read China is now the world's
third-, not fourth-largest economy)
                                
 * Hopes grow for more China stimulus to help region
                                
 * US dollar index at 3-yr high as global growth views
darken
                                
 * Australia GDP shrinks for first time in 8 years
 (Repeats to more subscribers; recasts, updates prices, adds
European outlook)
                                
 By Kevin Plumberg
                                
 HONG KONG, March 4 (Reuters) - Asian stocks rallied on
Wednesday on hopes Beijing will step up efforts to support the
Chinese economy, helping the entire region, while the U.S.
dollar rose to a three-year high as investors scrambled to
limit risk.
                                
 Major European stock markets were expected to open up as
much as 1 percent, according to financial bookmakers, after the
FTSEurofirst 300 index <.FTEU3> fell to a record low on
Tuesday.
                                
 Australian shares bucked the trend and dropped to the
lowest since August 2003 after gross domestic product
unexpectedly shrank in the fourth quarter for the first time in
eight years, adding to the damage that is tearing through
Asia-Pacific economies as the global downturn worsens.
                                
 Many policymakers and investors have their eyes set
squarely on China, hoping the government can reverse cooling
growth in the world's third-largest economy and spur global
demand.
                                
 A senior Chinese economic planning official offered a spot
of hope on Wednesday, saying the government will increase
spending in areas such as infrastructure and manufacturing on
top of the 4 trillion yuan ($584.7 billion) stimulus package
unveiled in November. [ID:nL4384]
                                
 The news sent Shanghai's stock index <.SSEC> up 6.1 percent
and helped reversee early losses in Hong Kong.
                                
 "The China news is positive as it's the only country that's
helping the global economy today," said Mitsushige Akino, chief
fund manager at Ichiyoshi Investment Management in Tokyo.
                                
 Shares of Hitachi Construction <6305.T> jumped 7 percent
and together with the rest of the machinery sector lifted
Japan's Nikkei share average <.N225> 0.9 percent. The Nikkei
hit a 25-year low on Tuesday.
                                
 The MSCI index of Asia-Pacific shares outside Japan fought
back from a three-month low <.MIAPJ0000PUS> and was up 1.3
percent. So far this year, the index has fallen 16.3 percent
compared with a 22.6 percent decline in MSCI's all-country
world index <.MIWD00000PUS>.
                                
 Hong Kong's Hang Seng index <.HSI> climbed 2.6 percent, on
the back of stronger Chinese industrial, banks and real
estate-related stocks.
                                
 HSBC shares <0005.HK>, however, remained weak, at one point
hitting their lowest since the Asian financial crisis of
1997-1998, after Europe's largest bank launched a heavily
discounted rights issue this week.
                                
 WHAT ABOUT THE BANKS?
                                
 However, hopes for a turnaround in China were tempered by
persistent worries about the stability of banks in the
developed world.
                                
 Days after American International Group <AIG.N> posted the
largest U.S. corporate loss ever and received a $30 billion
government bailout -- its second rescue -- Federal Reserve
Bernanke left open the possibility that even more money may be
needed to stabilise the banking system, 19 months after the
financial crisis broke out globally. [ID:nN03352803]
                                
 "There are concerns about revenue growth for banks due to
slowing global and domestic economies," said Savanth Sebastian,
equities economist at broker CommSec in Australia.
                                
 The IntercontinentalExchange's U.S. dollar index <.DXY>,
which measures its value against a basket of six major
currencies, was up 0.3 percent, having risen to the highest
since April 2006.
                                
 The index has gained 10 percent so far this year, as
investors cash out of foreign assets and seek the dollar's
liquidity as uncertainty about the global economy grows.
                                
 The Australian dollar fell 1 percent on the day to $0.6312
<AUD=>, after data showed the domestic economy shrank by 0.5
percent on a quarterly basis in the last three months of 2008,
putting the country on the brink of recession. [ID:nSYD282924]
                                
 Upward pressure on the U.S. dollar pushed down the euro to
a three-month low around $1.2455 <EUR=>.
                                
 Currency strategists at Standard Chartered Bank said
despite doubts about the U.S. dollar being able to sustain
strength in 2009 on the basis of valuation, the clearest trade
is still on dollar strength against Asia ex-Japan currencies.
                                
 "As long as global growth expectations are turning down,
Asian export growth will deteriorate further and Asia ex-Japan
currencies will remain under pressure. We continue to focus on
that especially small open economy currencies should be hit
further," they said in a note.
                                
 U.S. Treasuries remained under pressure, pushing up the
yield on the benchmark 10-year note <US10YT=RR> to 2.94 percent
from around 2.90 percent overnight, on expectations for a flood
of supply this year to finance countless bank rescues and
economic stimulus measures.
                                
 U.S. crude <CLc1> slipped 0.7 percent to $41.34 a barrel
after rising nearly 4 percent overnight on expectations OPEC
will cut output again to place a floor under prices. Brent
<LCOc1> was down 0.9 percent at $43.29. [O/R]