TOPWRAP 6-China, UK data upbeat; Russia to cut US debt share

* Russia to reduce share of U.S. Treasuries

* Britain, Italy industrial output rises, French drops

* Chrysler completes sale of strongest assets to Fiat

* China May industrial output tops forecasts-reports

(For more on the global crisis, click [nCRISIS])

By Leah Schnurr and Angus MacSwan

NEW YORK/LONDON, June 10 (Reuters) - Data from three major economies suggested on Wednesday the worst of the global recession may be over, although a sign that confidence in U.S. government debt may be slipping cast a shadow across the world's biggest economy.

A Russian senior central bank official said Russia will reduce the share of U.S. Treasuries in its foreign exchange reserves. Russia is the third-largest single country holding Treasuries and the news drove the dollar broadly lower.[nLA1052951]

Russia has been questioning the role of the dollar as the world's main reserve currency. It holds about 30 percent of its reserves, which total $404.2 billion, in Treasuries.

The move fueled worries about a possible reduction in confidence in America's fiscal health amid concerns about its massive deficit stemming from bailout and stimulus spending as it tries to pull out of recession.

U.S. Treasuries are typically seen as a safe haven investment, and sentiment will be tested by an auction of benchmark 10-year T-bonds US10YT=RR later on Wednesday.

In the auto sector, Chrysler LLC completed the sale of its strongest assets to a group led by Fiat SpA (FIA.MI), completing a fast-track reorganization directed by the Obama administration.[nN10436408]

The new company, known as Chrysler Group LLC, will begin operations immediately. Chrysler filed for bankruptcy protection at the end of April and parts of the automaker not involved in the sale will remain in bankruptcy to be sold or closed.

CHINA OUTPUT PACE UP

In China, an engine of world growth in recent years, newspapers said factory output rose in May at the fastest pace since last September, while official data showed British industrial output rose in April for the first time in more than a year and Italian output rose after 11 straight monthly falls.

Global economic data has improved in recent weeks from a nadir in March, partly spurred by trillions of dollars of government stimulus. Stock markets have rallied on hopes an end might be in sight to the deepest recession in six decades.

However, policymakers have suggested risks remain and any recovery will be take hold only slowly.

Underlining the risks, Sweden's central bank said on Wednesday it was taking out a hefty loan from the European Central Bank to safeguard financial stability, although the country's financial watchdog said Swedish banks could cope with "extreme" pressures.[nLA498286]

In Asia, Japanese machinery orders fell unexpectedly in April. French industrial output, too, fell more sharply than forecast, following news of weak German output Tuesday.

"It seems that we are really hitting rock bottom now and there doesn't seem to be much further to go," said Alexander Law, chief economist at consultancy Xerfi in Paris.

"We're looking toward a technical recovery in the third quarter and we're really in the last drags of this recession."

In the United States, falling exports and weaker imports underlined how much the world's biggest economy is struggling to sell its goods abroad and revive the domestic consumer demand that helps power the global economy. [ECONUS]

Concerns that the consumer remains under pressure also weighed on U.S. stocks as the price of oil topped $71 a barrel for the first time in seven months. Although there are signs demand for crude could be improving, higher gas prices could further hurt recession-weary consumers. [.N]

The April data showed U.S. exports weakened again, falling 2.3 per cent to $121 billion. Imports also declined for a ninth straight month but by a smaller amount than exports, resulting in a wider trade gap of $29.2 billion. [nN09390286]

BRITAIN SURPRISES ON UPSIDE

The surprise rise in UK industrial output in April raised the prospect that Britain could be the first major industrialised nation to beat recession. [nLA546449].

The Office for National Statistics said industrial output rose 0.3 percent on the month, the first increase since February 2008. However, doubt remains about how sustainable any British recovery will be because banks remain reluctant to lend.

British interest rates could stay low for some time, Bank of England policymaker Kate Barker said.

"The really important question is (whether) there's a pick up in the economy and if people can sustain that so it continues on to autumn," she told the Leicester Mercury newspaper.

The euro zone's third biggest economy, Italy, reported that its industrial output grew again in April after 11 consecutive monthly declines.

"It's better than expected but it needs to be put into perspective," said Bank of America's Guillaume Menuet. "Italy is one of the countries where output has fallen most."

European stocks rose on Wednesday, boosted by banking shares on the back of news that top U.S. banks have been cleared to repay state aid, while oil stocks benefited from crude oil's rise.

Asian shares rose, led by resource companies on a rally in oil and metals prices. Tokyo's Nikkei .N225 climbed 2.1 percent to its highest close in eight months, while MSCI's index of shares elsewhere in Asia .MIAPJ0000PUS gained 2.7 percent. [MKTS/GLOB] [.T]

(Reporting by Reuters bureaux; Writing by Angus MacSwan and Leah Schnurr; Editing by Eric Walsh)