* Stocks bounce back on China, Europe data
* Euro rises against dollar
* Demand for Portuguese bills in sale
* Investors eyeing ECB for debt moves
By Jeremy Gaunt, European Investment Correspondent
LONDON, Dec 1 (Reuters) - Signs of robust economic growth in
China and recovery in parts of Europe lifted world stocks on
Wednesday while a relatively successful Portuguese debt sale
helped ease short-term fears about the euro zone's debt crisis.
Sovereign debt spreads and the cost of insuring Portuguese
and other peripheral euro zone sovereign debt against default
fell, in part because of a belief that the European Central Bank
will take further action at its meeting on Thursday.
The euro was up more than 1 percent, rising above $1.31
<EUR>, European shares rose 1.3 percent and Japan was half a
percent higher. Wall Street also looked set to open strongly.
"The markets are expecting (the EBC) to announce some
upscaling of their purchases of government debt and perhaps
other unorthodox measures," said Deutsche Bank's Gilles Moec.
"There is a feeling that things have got to a point where
the ECB has to do more."
Others said dramatic action after the ECB policy meeting on
Thursday was unlikely but that the spreading euro zone debt
crisis demanded radical measures at some point. []
Macro data, meanwhile, was driving risk appetite.
Better-than-expected Chinese factory data in November, with
the official Chinese purchasing managers' index (PMI) rising to
a seven-month high of 55.2, showed one of the world's largest
economic engines to be in rude health. []
In Europe, the euro zone's manufacturing sector expanded at
its fastest pace in four months in November, led by heavyweights
Germany and France. Britain's manufacturing hit a 16-year high.
Focus remained, however, on the pressure on euro zone debt
and the methods by which it might be eased.
Fears were eased slightly after debt-ridden Portugal
successfully sold 500 million euros in 12-month T-bills although
borrowing costs rose to 5.281 percent from 4.813 percent
previously, in a fresh sign of that investors expect Portugal to
follow Ireland and Greece to seek a bailout.
Attention moved to a Spanish bond auction, due on Thursday.
There were signs that the euro zone debt crisis was raising
concerns among global policymakers. G20 deputy finance ministers
discussed "the financial situation in Europe" on Monday in a
teleconference, a senior G20 source in Asia said, and a top U.S.
Treasury official is travelling to Europe.
"You really need some aggressive action from the authorities
in Europe to try and calm nerves and that's really the key at
this stage," said Greg Gibbs, a strategist at RBS in Sydney.
The extent of the damage to bond holders was underlined by
new Citi bond returns data showing euro zone bonds lost 2.69
percent in November, with Ireland tumbling more than 11 percent,
Spain more than 7 percent and nearly Portugal 5.8 percent.
STOCKS REBOUND
The Chinese and European data lifted risk appetite on stock
markets. Although some countries fear Chinese policy tightening
if the economic is deemed to be rising too fast, good growth in
China is typically a booster for export-oriented countries.
MSCI's all-country world stocks index <.MIWD00000PUS> was up
0.8 percent and its emerging market counterpart <.MSCIEF> gained
a solid 1.6 percent.
European stocks also rose sharply with the FTSEurofirst 300
<> gaining 1.3 percent.
As with the euro, however, analysts said the sentiment could
easily be flipped by poor news on the euro zone bond front.
"We're getting a technical rebound. A number of indicators
showed the indexes as 'oversold', and some investors have
started looking for bargains. But we're keeping a close eye on
bond yield spreads to see if this stock rebound has legs," said
Harry Sebag, head of sales trading at Saxo Banque.
(Additional reporting by Charlotte Cooper, Gavin Jones and
Blaise Robinson, editing by Mike Peacock)
