GLOBAL MARKETS-UK pick up lifts European shares, sterling

Marc Jones

* Shares rebound from recent falls after British, Chinese data Dollar hits 4-mnth high v yen, euro claws back above $1.30

* Sterling hits week high vs euro, dollar

* Commodity markets stabilise after falls

LONDON, Oct 25 (Reuters) - Global shares and commodity markets rose on Thursday, pulled out of their recent slide by encouraging data from Britain and China and the U.S. Federal Reserve's latest commitment to support growth. Britain left recession in the third quarter, posting its strongest quarterly GDP growth in five years, official data showed. Also lifting the mood were comments from China's Ministry of Industry and Information Technology that the country's factory output should pick up towards the end of the year and a survey showing orders there at their highest levels in months.

European shares, which fell 3 percent in the first half of the week, were riding higher on the more positive market tone, with the FTSEurofirst300 index 0.6 percent higher at 1100.36 points by mid-morning. London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX were all firmly in positive territory and the MSCI index of global shares, which has also suffered in recent days, was up 0.4 percent. ``The UK GDP data clearly surprised on the upside, that has helped the market a lot,'' said Daiwa Securities Tobias Blattner. ``And in Greece there are clearly signs that there is an agreement with the Troika and it will be given two more years and there will a third bailout package, so things are clearly moving in the right direction.'' In currency markets, the progress in Greece saw the euro claw back above $1.30 following its recent weakness and the stronger-than-expected performance from Britain's economy sent sterling up against the dollar and euro . The dollar meanwhile hit a four-month high against the yen aided by a growing belief among investors that the Bank of Japan will unveil further monetary easing next week.

APPLE EYED U.S. stock futures pointed to a higher open on Wall Street when trading resumes, with results from technology powerhouse Apple and housing and employment figures set to dominate. Data from the European Central Bank provided some welcome relief in crisis-strained Spain, showing the recent haemorrhaging of deposits from banks there stopped last month.

For the euro zone as a whole though, other figures from the central bank also showed lending to firms in the region fell at an increased rate, down 20 billion euros. Sweden's central bank the Riksbank lowered its path for future interest rates on the back of a gloomy batch of economic data on Thursday and economists believe the ECB may soon follow.

``With the Eurozone facing a difficult fourth quarter after almost certainly suffering further GDP contraction in the third quarter... We have pencilled an (ECB) interest rate cut to 0.50 percent in December,'' said IHS Global Insight economist Howard Archer.

BASE CASE Following the broader rise in appetite for risk assets, German government bonds fell, mirroring falls in U.S. Treasuries after the Federal Reserve held course on monetary policy on Wednesday. British government bonds also fell as investors cashed in recent gains after the better-than-expected UK growth numbers. Oil prices rose back above $108 a barrel, after falling for a seventh consecutive session on Wednesday. The better Chinese data also helped London copper which added 0.7 percent to $7,872 a tonne and gold edged up 0.3 percent to $1,706.79 an ounce in thin trade. ``The Chinese economy looks set to improve slightly in the fourth quarter, which will also lift copper demand and put a floor on base metal prices,'' said China Futures Co analyst Yang Jun. ``But for demand to rise significantly, we need to see a clear and sustained improvement in China's manufacturing PMI numbers above 50.'' Yang added.