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GLOBAL MARKETS-Investors wait for Spain, central bank meetings

Tuesday, 2 Oct 2012 | 7:45 AM ET

* European shares rise 0.3 pct, euro holds above $1.29

* Wall Street seen opening higher

* Gold up, oil steady

* Aussie dollar slips as RBA cuts rates

By Marc Jones

LONDON, Oct 2 (Reuters) - European shares and the euro swung higher on Tuesday as investors decided news on Spain's bailout plans was encouraging enough to warrant fresh buying and looked ahead to central bank meetings and data releases.

The FTSEurofirst index of top European shares, which has risen 17 percent since June, dipped as much as 0.5 percent in early trading before a recovery left it 0.3 percent higher at 1108.82 points. The euro

also shrugged off early weakness to climb back above $1.292 but moves were choppy.

The swings were caused by the uncertainty over an expected request for aid from Spain.

European officials told Reuters that Madrid was ready to make the request but that Germany, the euro zone's paymaster, would prefer it to hold off for now.

Also adding to the confusion about when aid could arrive, Spanish media reported that Spain's Prime Minister Mariano Rajoy has told party members he will not make a request this weekend.

"It's difficult for markets to get any sense of direction when you have such contrasting comments coming out from Europe," said Alastair McCaig an analyst for spread betting firm IG.

"One second you believe the Spanish are about to apply for a bailout, the next we are getting comments from Germany saying they should hold off a bit longer."

The European Central Bank has said Spain must request aid before it launches a new, potentially-unlimited programme of bond purchases, something which markets hope could stop the crisis getting worse.

Wall Street is expected to build on Monday's modest gains when trading resumes later, but with employment data not due until Friday investors there are also focused on Spain and euro zone issues.

"I think the market feels that we are closer to some type of action and resolution in terms of the Spanish problem," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont. "That's certainly helping markets this morning."

S&P 500 futures

rose 7.6 points, Dow Jones industrial average futures

rose 47 points, and Nasdaq 100 futures

added 13 points.

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Global manufacturing PMIs: Euro debt crisis graphics Italy,Spain market overview Euro zone unemployment rate:

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MACRO PICTURE

Global shares measured by the MSCI index were up 0.1 percent to 333.66 points. Asian equities

.

enjoyed small gains overnight following a surprise improvement in the U.S. manufacturing sector and promises of continued support from the Federal Reserve.

Spanish and Italian bond yields - which move inversely to prices - continued their recent improvement with ten-year Spanish government bond yields

12 basis points lower at 5.77 percent and Italian yields 4 basis points lower.

Economists and market strategists have been encouraged by the recent progress in the euro zone but believe markets could well slow as focus returns to global economic fundamentals.

"If you go into the helicopter and you accept the premise we have removed just about all of the tail risk in the system, we change the mechanics of how we invest from the next EU summit or whatever it is, back to the macro growth picture," said Saxo bank chief economist Steen Jakobson.

"Data has clearly been better than expected for a while but in the last week and a half they have turned down again. That has been one of the reasons for the lack of follow through from (recent Federal Reserve stimulus) QE3."

CENTRAL BANKS IN FOCUS Gold prices , which are seen as a safe haven asset, remained close to their highest level of the year. Oil prices

slipped to $112 a barrel as investors weighed a weaker outlook for fuel demand due to sluggish economic growth.

Earlier on Tuesday, Australia's central bank, the RBA, kicked off a week of central bank meetings by cutting its main rate by a quarter point to 3.25 percent. The European Central Bank, the Bank of England and the Bank of Japan all follow later this week although none are expected to move rates.

A rise in euro zone producer prices on Tuesday added to economists' conviction that the ECB would not lower its 0.75 percent main rate.

It was the RBA's third cut in six months as the slowdown in China, a strong currency, soft export prices and benign inflation all slow its economy.

The move saw the Australian dollar

slip to a one-month low of $1.0305 from around $1.0363 before the announcement, but Australian shares

rose 1 percent.

(additional reporting by Blaise Robinson and Nia Williams; editing by Anna Willard)

((marc.jones@thomsonreuters.com)(+44)(0)(207 542 9033)(Reuters Messaging: marc.jones.thomsonreuters.com@reuters.net))

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