GLOBAL MARKETS-Shares, euro climb on Spain bailout hope

* Expectations grow Spain will request bailout
* Gold holds near highest of the year; euro gains
* Aussie dollar slips as RBA cuts rates

By Wanfeng Zhou
NEW YORK, Oct 2 (Reuters) - Global shares edged higher on
Tuesday while the euro advanced on expectations Spain will soon
request a bailout seen as necessary to resolve the euro zone
debt crisis, but uncertainty about the timing of the aid limited
gains.
Spain's borrowing costs fell after European officials said
on Monday that Madrid is ready to make the request as early as
next weekend although Germany has signalled that it should hold
off.
A request for a bailout is viewed as positive for financial
markets because it would trigger Spanish bond buying by the
European Central Bank that would lower the country's borrowing
costs. It also removes another layer of uncertainty in the
region's three-year old debt crisis.
"(Spain's) recent budget proposal...seemed intentionally
designed with a bailout request in mind and the market is
assuming it's just a question of when," said Brad Bechtel,
managing director at Faros Trading in Stamford, Connecticut.
"The sooner the better for markets as every hint of a
looming request sends markets higher."
The MSCI global stock index rose 0.2 percent
to 334.03.
Wall Street stocks were little changed. The Dow Jones
industrial average dropped 1.03 points, or 0.01 percent,
to 13,514.08. The Standard & Poor's 500 Index gained 4.16
points, or 0.29 percent, to 1,448.65. The Nasdaq Composite Index
gained 16.82 points, or 0.54 percent, to 3,130.36.
The FTSEurofirst-300 index of pan-European shares
edged up 0.1 percent to 1,105.54 points.
Adding to the confusion about when aid could arrive,
Spanish media reported that Spain's Prime Minister Mariano Rajoy
has told party members he will not make a request this weekend.
"It's difficult for markets to get any sense of direction
when you have such contrasting comments coming out from Europe,"
said Alastair McCaig an analyst for spread betting firm IG.
Yields on two-year Spanish bonds were 16 basis
points lower at 3.25 percent, with their 10-year equivalent down
12 basis points at 5.77 percent.

The euro rose 0.3 percent to $1.2927, while the
dollar gained 0.1 percent to 78.04 yen.
Investors also awaited a number of central bank meetings
later this week. The European Central Bank, the Bank of England
and the Bank of Japan all follow later this week although none
are expected to move rates.
Earlier on Tuesday, Australia's central bank cut its main
rate by a quarter point to 3.25 percent. The Australian dollar
fell to a one-month low of $1.0291 and last traded down
0.6 percent at $1.0298.
It was the RBA's third cut in six months as the slowdown in
China, a strong currency, soft export prices and benign
inflation all slow its economy.
U.S. Treasuries prices fell as speculation about
Spain and an unexpected rate cut by Australia dented demand for
safe-haven government debt. The benchmark 10-year Treasury note
was down 2/32, yielding 1.6249 percent.
"This sense of a better environment for risk assets is
taking a small shine off rates," said John Briggs, Treasury
strategist at RBS Securities in Stamford, Connecticut.
"Australia eased, which wasn't particularly expected, so
that gave the 'additional-stimulus-will-help-growth' crowd a bit
of a boost," Briggs said.
Brent crude rose 12 percent to $112.31 a barrel as
investors weighed a weaker outlook for fuel demand and sluggish
economic growth against the risk of possible supply disruptions
because of tensions between Iran and the west.
U.S. crude rose 2 cents to $92.50.
Gold prices, which are seen as a safe haven asset,
remained close to their highest level of the year. Spot gold was
last at $1,776.19 an ounce.