GLOBAL MARKETS-Asian stocks gain on China hopes; caution lingers

                                
 * Stocks edge higher; Nikkei up 2.7 pct
                                
 * Euro dips ahead of ECB meeting; BOE also meets
                                
 * Caution lingers; gold recovers from recent falls
                                
 * Oil prices dip, paring rally in previous session
                                
 By Rafael Nam
                                
 HONG KONG, March 5 (Reuters) - Asian stocks extended gains
on Thursday on hopes that a revival in China will support the
weak global economy, while the euro fell on expectations the
European Central Bank will cut rates to an all-time low later
in the day.
                                
 China's Premier Wen Jiabao said on Thursday that China will
achieve 8 percent growth this year -- a level considered key to
maintain employment growth in the country -- despite the
deepening global economic crisis. [ID:nPEK39999]
                                
 Wen did not announce fresh economic stimulus as some
investors had hoped, but his assurances helped extend a rally
in Asian markets, after shares worldwide had surged on
Wednesday on reports that China may increase its spending to
spur growth.
                                
 Still, a sustained turnaround in global markets is unlikely
until confidence in the U.S. economy and its shaky banking
sector can be restored, analysts said.
                                
 Investors have yet to part completely from safe-haven
assets such as gold, which gained on Thursday. Oil prices
dipped, paring a near 9 percent rally in the prior session that
had been spurred by an unexpected drop in U.S. crude stocks and
an increase in gasoline demand.
                                
 "We do need to see some more stability in the banking
system in the U.S. before we get a genuine rally on any
market," said David Taylor, market analyst at CMC Markets.
                                
 Japan's Nikkei <.N225> rose 2.4 percent as shipping firms,
exporters and machinery makers like Komatsu Ltd <6301.T>
climbed on hopes Beijing will be able to kickstart the cooling
Chinese economy.
                                
 The MSCI index for Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> rose 0.2 percent as of 0250 GMT, bringing its
gains over the past three sessions to about 2 percent.
                                
 Those gains are not even half the 4.3 percent slump Asian
stocks lost on Monday, when worries about the health of the
global financial system sparked a global rout that saw U.S.
stocks slide to 12-year lows.
                                
 Australian shares <.AXJO> rose 0.6 percent as big mining
firms jumped on hopes that a China recovery would spur demand
for metals, while key indexes in Shanghai <.SSEC> and Taiwan
<.TWII> advanced 1-2 percent.
                                
 But shares in South Korea <.KS11> and Hong Kong <.HSI> were
flat, while Singapore <.FTSTI> lost 0.6 percent.
                                
 Growing hopes that China will weather the downturn are
being counter-balanced by more sobering news on the global
economy.
                                
 Reports on Wednesday showed U.S. employers cut nearly
700,000 jobs in February and the U.S. service sector slump
deepened as the year-old recession showed little sign of
abating. [ID:nN04538530]
                                
 Elsewhere, Japanese firms' capital spending tumbled 17.3
percent in October-December from the same period a year
earlier, while the euro zone's dominant service sector sank
still deeper into recession during February. [ID:nT337764] and
[ID:nL462612]
                                
 FOCUS ON ECB, BOE
                                
 The euro slipped ahead of the ECB meeting, with the central
bank overwhelmingly expected to cut interest rates by half a
percentage point to 1.5 percent in a bid to revive the
sputtering euro-zone economy. [ID:nL2901405]
                                
 The focus instead is for signals on where the rate floor
lies as euro zone policy makers seem reluctant to follow the
U.S Federal Reserve and the Bank of Japan in going towards
zero.
                                
 The euro fell 0.4 percent from late U.S. trade to $1.2614
<EUR=> after at one point on Wednesday dropping below $1.25 to
strike its lowest levels since late November.
                                
 The euro slipped 0.3 percent against the yen to 125.18 yen
<EURJPY=R>.
                                
 Sterling was down 0.3 percent at $1.4149 <GBP=D4>. The Bank
of England is expected to cut interest rates by 50 basis points
to 0.5 percent later on Thursday and announce it will start
boosting the money supply to spur economic growth.
[ID:nL4370756]
                                
 Commodity prices were broadly lower to steady after
rallying on Wednesday, due in part to optimism that a reviving
China will spur stronger demand for oil and other raw
materials.
                                
 U.S. crude prices <CLc1> fell 43 cents to $44.95 a barrel,
paring gains of $3.73 on Wednesday.
                                
 Though assets seen as safer in volatile times have ceded
ground recently, investors have yet to exit these positions in
big numbers as gloomy economic news continues to flood in.
                                
 Spot gold <XAU=> gained about $6 to $912.30 ann ounce,
recovering after prices for the precious metal had fallen in
the eight previous sessions to hit a three-week low on
Wednesday.