* Wall Street rallies, S&P 500 cuts losses for the week
* Brent oil rises over $108 on promising U.S. data, supply concerns
* Data bolsters dollar, euro gains before ECB meets next week (Adds opening of U.S. markets, byline, dateline; previous LONDON)
By Herbert Lash
NEW YORK, March 28 (Reuters) - Global equity markets rose on signs China will step in to support a cooling economy and on mostly promising U.S. data, while government bonds yields fell across the euro zone on renewed bets the European Central Bank will ease policy next week.
Brent crude rose above $108 a barrel, heading for the first weekly rise in five, on the U.S. data and concerns that possible Western sanctions on Russia's energy sector could disrupt global supplies.
Gold fell to fresh six-week lows under $1,300 an ounce and was on track for a second straight weekly decline as the U.S. economic outlook lifted the dollar and bolstered risk appetites.
A dip in sentiment this month offered confirmation that U.S. economic growth slowed in the first quarter. But U.S. consumer spending rose 0.3 percent in February, matching economists' expectations, the Commerce Department said, after gaining 0.2 percent in January.
Equity markets were bolstered by Premier Li Keqiang's comments that China had the necessary policies in place and would push ahead with infrastructure investment to shore up growth.
"This could avert a slowdown in China, and any stimulus that helps growth somewhere should help growth globally," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.
Wall Street opened higher, following gains in European indices and a measure of equity markets around the globe. Emerging market stocks also rose.
MSCI's all-country world index rose 0.8 percent, and the FTSE Eurofirst 300 index of regional European shares was up 0.74 percent at 1332.0 points for its fourth straight day of gains.
The Thomson Reuters/University of Michigan's consumer sentiment index dipped to 80.0 this month from 81.6 in February, a decline that did not faze investors. The index was little changed from earlier in March.
"Sentiment was off a bit, but still reasonably high, which is encouraging," Ablin said. "It seems like we're getting past weather issues, which will allow us to look at fundamentals again."
The Dow Jones industrial average rose 142.25 points, or 0.87 percent, to 16,406.48. The S&P 500 gained 16.94 points, or 0.92 percent, to 1,865.98 and the Nasdaq Composite added 49.402 points, or 1.19 percent, to 4,200.635.
Spanish, Italian, Portuguese and Irish bond yields fell to new historical lows as an unexpected drop in Spanish inflation bolstered expectations the ECB could ease monetary policy further.
Italy's cost of borrowing over 10 years fell to its lowest since October 2005 at a Friday auction.
Data showed that Spanish consumer prices fell 0.2 percent year-on-year in March, compared with a previous reading of 0.0 percent and a Reuters poll forecast of a 0.1 percent rise.
That led to expectations that inflation for the whole euro zone, due on Monday, could fall below the 0.6 percent Reuters consensus. The ECB's target is just below 2.0 percent.
The euro fell to a three-week low against the dollar, with investors mindful of strong rhetoric from ECB officials about its recent strength, but the single currency later recovered on uncertainty over whether the bank will take action.
The euro has sagged since suggestions of more ECB action this week from Germany - whose policymakers have in the past repeatedly voiced concerns about unorthodox monetary easing.
The euro was slightly higher on the day at $1.3752, having dipped to $1.3707 earlier.
The U.S. dollar rose 0.54 percent to 102.71 yen, buoyed in part by expectations that the Federal Reserve may start to tighten policy in the early part of next year.
The benchmark 10-year U.S. Treasury note fell 11/32 in price to yield 2.7135 percent.