GLOBAL MARKETS-Global stocks rise on China hopes, oil surges

                                
 * Stocks rally curbs government debt appeal
                                
 * Oil rises above $45 on surprise U.S. crude stocks' draw
                                
 * Dollar hits 4-month high vs yen, clears 99 mark
 (Recasts with U.S. markets, changes dateline; previous
LONDON)
                                
 By Herbert Lash
                                
 NEW YORK, March 4 (Reuters) - World stocks bounced back
from multiyear lows on Wednesday, buoyed by signs of economic
recovery in China and plans by its government to increase
fiscal spending, news that helped lift oil and metals prices.
                                
 U.S. crude oil futures jumped more than 7 percent,
extending gains to top $45 a barrel after inventory of crude in
the United States declined unexpectedly and demand for gasoline
rose. For details, see [ID:nSP408417]
                                
 Euro zone and U.S. government debt prices mostly fell as
the rebound in equities undermined investors' appetite for less
risky fixed-income assets. [ID:nL4572718][ID:nN04542677]
                                
 But the cost of borrowing dollars over three months nudged
higher as ongoing worries over the financial sector, where
counterparty risks have risen, kept banks wary about lending to
each other. [ID:nL4909738]
                                
 A key gauge of Chinese manufacturing rose in February for
the third straight month, hitting a five-month high and lifting
investor optimism on hopes the data signaled that China, a
major driver of global growth, may be on the brink of economic
recovery. China also said it will boost spending on
infrastructure and manufacturing under a second stimulus
package. [ID:nSP488798]
                                
 The Shanghai Composite Index <.SSEC>, the main Chinese
stock index, surged 6.1 percent in its biggest gain since
November. [ID:nSHA31719]
                                
 European shares rallied, breaking three straight sessions
of losses, and U.S. stocks snapped a five-day sell-off. Higher
prices for oil and other commodities -- driven by China hopes
-- spurred energy and natural resource stocks.
                                
 "The market is encouraged by the news from China," said Joe
Arsenio, president of Arsenio Capital Management in Larkspur,
California. "They believe (China) will gain traction in the
second quarter."
                                
 Exxon Mobil <XOM.N> gained 2.1 percent while miner
Freeport-McMoRan Copper & Gold Inc <FCX.N> rose 14 percent.
                                
 Shares of Caterpillar Inc <CAT.N>, a big exporter to China
and a major seller of equipment to the mining industry, rose
13.7 percent.
                                
 After 1 p.m., the Dow Jones industrial average <.DJI> rose
117.08 points, or 1.74 percent, at 6,843.10. The Standard &
Poor's 500 Index <.SPX> gained 12.03 points, or 1.73 percent,
at 708.36. The Nasdaq Composite Index <.IXIC> added 27.05
points, or 2.05 percent, at 1,348.06.
                                
 The FTSEurofirst 300 <.FTEU3> index of top European shares
closed at 696.23 points, up 4 percent.
                                
 Miners Rio Tinto <RIO.L> gained 14 percent and BHP Billiton
<BLT.L> rose 12.9 percent on the back of higher copper prices,
while steelmaker ArcelorMittal <ISPA.AS> rose 12.4 percent.
                                
 Copper jumped over 5 percent to its highest level in more
than three months as investors pinned hopes on demand from
China, the world's largest consumer of the red metal.
                                
 The rise in equity markets around the world overshadowed
more dire economic data suggesting that the U.S. and euro zone
recessions have yet to hit bottom.
                                
 U.S. private companies hemorrhaged 697,000 jobs in February
and the service sector slump deepened [ID:nN04538530].
                                
 The dollar vaulted to a four-month high against the yen as
another slide in the U.S. private-employer payrolls and
persistent worries about the world economy boosted safe-haven
flows into the U.S. currency. [ID:nN04425671]
                                
 But the dollar cut earlier gains against the euro and
sterling as stocks rallied and investors took profits ahead of
Friday's government payrolls report and interest rate decisions
due Thursday from the European Central Bank and Bank of
England.
                                
 The dollar rose as much as 99.48 yen, closing in on 100 for
the first time since early November, as investors worried about
Japan's struggling economy and the U.S. jobless data.
[ID:nOSL009760]
                                
 The dollar <JPY=> rose 0.97 percent at 99.25 against the
yen, but it fell against a basket of major currencies, with the
U.S. Dollar Index <.DXY> down 0.49 percent at 88.751.
                                
 The euro <EUR=> rose 0.40 percent at $1.2615.
                                
 U.S. government debt fell. The benchmark 10-year U.S.
Treasury note <US10YT=RR> fell 36/32 in price to yield 3.02
percent. The 2-year U.S. Treasury note <US2YT=RR> slipped 6/32
in price to yield 0.98 percent.
                                
 U.S. light sweet crude oil <CLc1> rose $2.73 to $44.38 per
barrel.
                                
 Gold fell in Europe, flirting with three-week lows, as the
bounce in equities lured investors back into riskier assets.
[ID:nL4187579]
                                
 Spot gold prices <XAU=> fell $8.40 to $906.85 an ounce.
                                
 Asian stocks rallied on Wednesday on hopes Beijing will
step up efforts to support the Chinese economy,
                                
 Japan's Nikkei share average <.N225> rose 0.9 percent,
after sliding to a 25-year low on Tuesday. The MSCI index of
Asia-Pacific shares outside Japan <.MIAPJ0000PUS> rose 1.3
percent.
 (Reporting by Edward Krudy, John Parry, Steven C. Johnson in
New York and Emelia Sithole-Matarise, Ian Chua, Christopher
Johnson, Jan Harvey and Rebekah Curtis in London and Peter
Starck in Frankfurt; writing by Herbert Lash; Editing by Leslie
Adler)