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GLOBAL MARKETS-Shares, euro gain as Spanish bank fears ease

* European shares jump at start of new quarter

* Spanish bank audit seen clearing the way for bailout

* U.S. stocks set to open higher

* Brent Crude slips below $112 a barrel on growth fears

By Richard Hubbard

LONDON, Oct 1 (Reuters) - Investors set aside worries over the growth outlook on Monday to take fresh positions in European stocks at the start of the new quarter, reassured by a report on Spanish banks that showed the sector's problems were no worse than feared.

Even evidence that the euro zone's economy was heading for a second recession in three years failed to dampen demand, with many investors hoping aggressive central bank action to boost activity will lead to pick up.

The FTSEurofirst 300 index of top European shares, which lost 2.7 percent last week, was up nearly one percent at 1,098.78 points.

The German Dax was up 1.1 percent, Britain's FTSE 100 index was up 1.0 percent, and the French CAC 40

rose 1.3 percent. U.S. stock index futures pointed to a higher open on Wall Street

"We are in a new quarter and seeing some fresh buying across the board. Given the background that we have at the moment, with incredibly low interest rates, equities are being seen as the value proposition and it's hard to get too bearish," Paul Kavanagh, partner and equity strategist at Killik & Co, said.

The gains in Europe came as a new business survey showed the euro zone manufacturing sector had put in its worst performance in the three months to September since the depths of the financial crisis.

"The sector will act as a severe drag on economic growth. It therefore seems inevitable that the region will have fallen back into a new recession in the third quarter," said Chris Williamson, chief economist of the data collator Markit.

The euro bounced off a three week low after the data came out to be up 0.3 percent at $1.2895 , as investors preferred to sell the dollar because of the expected impact of the Federal Reserve's decision last month to ease policy.

The latest data on Europe followed weak readings from other surveys in China and Japan and a sharp fall in exports during September from South Korea, the world's seventh-largest exporting nation.

However, the new data covers the period up to September when major central banks, in particular the Fed, pledged to pump more liquidity in to the financial system - policies which have yet to impact on economic activity.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Global manufacturing PMIs: German manufacturing PMI: Euro zone unemployment rate: ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> SPAIN AGAIN

The European single currency and other euro zone asset markets were expected to come under renewed pressure as the focus swings back onto Spain, which is seen as likely to call for international help soon to meet its debt financing needs.

Some in the markets expect the trigger for a bailout to be pulled when ratings agency Moody's announces its latest review of Spain's sovereign rating which may see Europe's fourth-largest economy downgraded to junk status.

"We will see the euro head lower until Spain applies for a bailout and the probability of that happening could rise if Moody's downgrades Spain," said Adam Myers, senior foreign exchange strategist at Credit Agricole.

But with no news from Moody's on Monday, Spanish bond yields were falling and investors sold safe-haven German government bonds on relief that Friday's report on the banks showed extra capital needs were manageable, removing a major obstacle in the way of any international bailout.

Spanish 10-year yields were seven basis points down at 5.91 percent with 5-year yields down by a similar amount at 4.91 percent .

German 10-year yields were up three basis points at 1.457 percent .

DEMAND PULLBACK

Commodity markets better reflected the prospect of slower global demand coming from the weaker economic data, with Brent crude falling below $112 per barrel in early trade.

However, that comes after it closed the third quarter with its biggest three-month gain in 1-1/2 years.

Gold also drifted lower suffering not just from the weaker economic data but also a stronger U.S. dollar, which makes the precious metal less attractive to investors.

The dollar has climbed to its highest levels since mid-September against a basket of currencies on data showing currency speculators had boosted their bets against the greenback to the highest level in more than a year in the week ended Sept. 25

The U.S. Federal Reserve's pledge last month to pump $40 billion in new cash into the financial system every month until the economy generates enough jobs to lower the unemployment rate makes future weakness of the currency more likely.

Spot gold was down 0.3 percent to $1,766.10 an ounce although it to was coming off a strong last quarter when it rose nearly 11 percent, its biggest quarterly rise since the second quarter of 2010.

(Additional reporting by Anirban Nag and Atul Prakash; editing by David Stamp and Anna Willard)

((richard.hubbard@thomsonreuters.com)(Tel +44 207 5423215))

Keywords: MARKETS GLOBAL/