GLOBAL MARKETS-Asian shares turn higher but wary of Spain, Greece debt
* MSCI Asia ex-Japan erases early losses, Nikkei off 2-week lows
* China shares rebound on bargain hunt as Shanghai neared critical level
* Euro off 2-week low vs dollar, yen near 1-week high vs dollar
* Commodities, gold recover as dollar index inches lower
* European shares likely gain
By Chikako Mogi
TOKYO, Sept 27 (Reuters) - Asian shares rebounded on Thursday, buoyed by a sharp upturn in Chinese shares, but sentiment was vulnerable to uncertainty over a bailout for Spain and signs Europe is struggling to find a unified approach to the Greek debt crisis.
U.S. stock futures hinted at a solid Wall Street open with a 0.4 percent gain, and financial spreadbetters expected London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX to also open higher by as much as 0.6 percent.
A recovery in Chinese shares pulled the MSCI index of Asia-Pacific shares outside Japan out of negative territory to push it up 1 percent.
"This is mostly month-end window-dressing coupled with long weekends in the region that's lifted us off earlier lows," said a Hong Kong-based trader at an Asian brokerage.
Hong Kong shares rose 1.3 percent, led by banks and property developers in buying largely related to quarter-end portfolio adjustments ahead of the week-long holiday in China next week.
The Shanghai Composite Index jumped nearly 3 percent on speculation that authorities might take steps to prop up the mainland's beleaguered stock markets. Shanghai shares closed at their lowest since February 2009 on Wednesday at 2004.2, a level perceived low enough by market players to prod authorities to prop up the market.
"Shanghai shares are approaching a level low enough to prompt investors to buy back shares as the level reflects excessively bearish sentiment and offers a bargain," said Hirokazu Yuihama, a senior strategist at Daiwa Securities.
Hong Kong and domestic Chinese stock markets have also been eroded by the Chinese central bank's lack of action in the wake of global easing from the United States to Japan, as it has refrained from cutting interest rates or banks' reserve requirements since July.
Instead, China has been pumping ample funds to the country's money markets, injecting a historical record of 365 billion yuan ($58 billion) this week to avoid a potential liquidity crunch ahead of next week's holidays.
"Markets may be hoping for central bank stimulus, but I think China's aim is to achieve a soft landing and not to beef up fundamentals greatly. China may be feeling that measures taken so far are sufficient to achieve that goal," Yuihama said.
Japan's Nikkei stock average closed up 0.5 percent, rebounding from a two-week low touched earlier in the day.
SPAIN UNVEILS BUDGET
Despite worries about Europe denting sentiment, asset prices broadly remained in recent ranges.
"Economic data seems encouraging in the U.S., concern is rising in Asia and (there is) some element of disbelief on the European scene," Societe General strategist Sebastian Galy said in a note. "That disbelief in Europe needs to be more severe for an actual full-scale correction, though rising volatility may be enough to trigger a further forced reduction in some peripheral assets."
The euro traded at $1.2883, off a two-week low of $1.2835 touched on Wednesday.
The yen was at 77.67 yen, near a one-week high of 77.585 hit on Wednesday.
Growing investor risk aversion lifted the CBOE Volatility index, a gauge of volatility seen in the Standard & Poor's 500 index, to a three-week high to close up 8.94 percent on Wednesday, its biggest daily rise in 2-1/2 weeks.
Fierce protests in Spain and Greece against severe austerity measures roiled markets, sending 10-year Spanish bond yields back above 6 percent for the first time since the European Central Bank said on Sept. 6 that it would buy sovereign bonds to trim the borrowing costs of euro zone states that request a bailout.
Spanish Prime Minister Mariano Rajoy presents a series of reforms and a tight 2013 budget on Thursday, while gradually moving towards seeking a sovereign bailout, which would activate the ECB's bond-buying scheme.
Spain also faced Moody's latest credit rating review and an independent audit's stress test showing how much more money Madrid will need to strengthen its shaky banking sector.
Greece's international lenders remained divided over how to approach Athens's debt restructuring as creditors seek to minimise losses.
"In this environment, unless there is news of a Spanish bailout, I think the momentum is for a weaker euro," said Mitul Kotecha, head of global foreign exchange strategy for Credit Agricole in Hong Kong.
The dollar index measured against a basket of currencies eased 0.2 percent to 79.736, retreating from a two-week high of 80.012 reached on Wednesday. A weaker dollar helped a modest recovery in dollar-denominated industrial commodities such as oil and copper, as well as gold.
U.S. crude inched up 0.2 percent to $90.18 a barrel and Brent edged up 0.1 percent to $110.14. London copper rose 0.6 percent to $8,165 a tonne. Spot gold traded up 0.2 percent at $1,755.76 an ounce.
Not all Asian countries are in need of immediate stimulus, however, as the Philippines' central bank governor told Reuters on Wednesday that domestic demand remained buoyant despite the global slowdown dampening exports.
Asian credit markets were marginally firmer, with the spread on the iTraxx Asia ex-Japan investment-grade index narrowing by 1 basis point.
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