* Euro zone inflation steady
* Swiss franc policy unchanged
* Spanish risks ease
LONDON, Dec 15 (Reuters) - The sell-off in European stocks and the single currency paused for breath on Thursday as a good Spanish debt auction eased market nerves over the euro zone debt crisis and the bleak global economic outlook.
Data showing euro zone annual inflation steady at 3 percent for November also suggested the European Central Bank had ample room for another rate cut.
"The imminent recession, plus sharply lower commodity price inflation, should push inflation below 2 percent in the course of next year," said Martin Van Vliet, economist at ING.
"The prospect of markedly slower inflation gives the European Central Bank room to ease monetary policy further."
The euro rose about 0.2 percent at around $1.30 after having fallen to as low as $1.2945 on Wednesday, its lowest level since January 11. The next major support for the currency will come at $1.2860, which is its lowest price this year.
The safe-haven Swiss franc got a boost after the central bank kept its cap on the currency at 1.20 per euro, knocking back speculation it would move to weaken the currency further.
Meanwhile another traditional safety play, gold, saw its price recover from the hammering it has taken in recent days as fund managers liquidated their holdings to be virtually unchanged in London at $$1,590 an ounce.
Gold dropped by 3.5 percent on Wednesday to its lowest levels since September and has lost 9 percent of its value this month. Gold has increasingly become prone to pressure from the wider financial market, moving in tandem with other assets as investor sentiment remains fragile.
U.S. stock markets were also poised to open higher on Wall Street after falling to their lowest level in two weeks on Wednesday.
SPANISH FEARS EASE
The sense of relief in European markets was boosted when the risk premium on benchmark Spanish government bonds eased after a well received bond auction, which raised more than the government had targeted.
The Treasury sold just over 6 billion euros of bonds, well above the top end of the 2.5-3.5 billion euro range targeted, sending the 10-year Spanish benchmark yield to a session low of 5.59 percent, down 15 basis points on the day.
Spain's performance contrasted with Italy on Wednesday which saw its yields rise sharply on its five-year bonds.
"These are still high levels of rates but they are a lot better than Italy's," said Marc Ostwald, a strategist at Monument Securities.
Worries about Spain's ability to fund itself are less acute than for Italy, which faces redemption and coupon payments of around 100 billion euros between January and April, Reuters data shows. Spain has no major redemptions until April.
"In regards to Q1 of next year in particular, Italy has so much debt to issue, a tad more that $60 billion, and we remain sceptical that the ECB (European Central Bank) can offset this," said Michael Leister, euro zone rates strategist at WestLB in Dusseldorf.
DATA STILL BLEAK
The economic gloom surrounding the euro zone also eased slightly after first estimates of the Purchasing Manager's Indexes in December showed a slight improvement over November but the numbers still point to an economic contraction ahead.
"The December survey revealed a widening contrast of performance within the euro zone. Germany is likely to have stagnated in the fourth quarter. Elsewhere in the euro zone, however, the rate of contraction remained steep - the fastest since mid-2009," said Chris Williamson, the chief economist for the data compiler Markit.
A private sector survey out earlier indicated China's factory output will shrink again in December, adding to the headwinds facing a global economy struggling with sluggish U.S. growth and the euro zone's problems.
Despite the economic gloom European shares bounced off two-week lows tom be slightly firmer but as liquidity dries up ahead of the year end.
The FTSEurofirst 300 index of top European shares was up 0.7 percent after falling 2.1 percent in the previous session.
Global stocks as measured by the MSCI world equity index extended their losing streak this week with the index now down about 4.7 percent in the past month.