(Updates to mid-afternoon activity)
* Wall Street rallies, S&P 500 cuts losses for the week
* Brent crude up on week on U.S. data, supply concerns
* Gold at six-week low as U.S. economic picks up
* Dollar edges higher vs yen; euro up before ECB meeting
* Intermediate-dated U.S. Treasuries near 2-month high
By Herbert Lash and Barani Krishnan
NEW YORK, March 28 (Reuters) - Global equity markets rose on Friday, bolstered by U.S. economic data that was largely promising and signs that China will step in to support a cooling economy, while euro zone government bond yields fell on renewed bets the European Central Bank will ease policy next week.
The price of Brent crude oil was flat, near $108 a barrel, heading for the first weekly rise in five, helped by data showing a rise in U.S. consumer spending in February.
Gold fell to 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 appetite.
Yields on intermediate-dated U.S. Treasury notes neared two-month highs. Analysts and traders expected such debt to continue underperforming longer-term bonds after Federal Reserve Chair Janet Yellen's indication last week that U.S. interest rates could be hiked by spring 2015.
On Wall Street, all 10 major S&P 500 sectors gained in a broad rally after two days of losses.
Among the indexes, the Dow turned positive for the week and the S&P sharply cut weekly losses to show a gain for 2014. But the Nasdaq remained on track for a negative week after heavy profit-taking on some of the market's biggest outperformers.
"We are seeing a good rebound today, but there are still a lot of factors that indicate we could be going into a more sizeable correction," said Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research in Austin, Texas.
"Almost everyday this week we've been seeing a pattern of the market opening higher and then selling off towards the close. Some are saying that it's the smart money is selling off at the end of the day. If we see that pattern again today, that would be concerning."
The Dow Jones industrial average was up 105.58 points, or 0.65 percent, at 16,369.81. The Standard & Poor's 500 Index was up 13.07 points, or 0.71 percent, at 1,862.11. The Nasdaq Composite Index was up 29.53 points, or 0.71 percent, at 4,180.76.
For the week, the Dow was up 0.6 percent; the S&P slipped 0.1 percent, and the Nasdaq was down 2 percent.
U.S. consumer spending rose 0.3 percent in February, matching economists' expectations, the Commerce Department said, after gaining 0.2 percent in January.
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.
Equity markets were mostly 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.
MSCI's all-country world index rose 0.7 percent, and the FTSE Eurofirst 300 index of regional European shares was up 0.7 percent at 1331.67 points for its fourth straight day of gains.
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.
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.
Italy's cost of borrowing over 10 years fell to its lowest level since October 2005 at a Friday auction.
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 the currency's recent strength, but the euro 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 single currency was slightly higher on the day at $1.3751, having dipped to $1.3707 earlier.
The U.S. dollar rose 0.7 percent against the yen, to 102.87 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 was down 14/32, its yield at 2.7226 percent.
Brent oil rose 0.2 percent on the day and 1 percent on the week, trading at above $108 a barrel. U.S. crude hovered at below $102 a barrel, up 0.6 percent for the session and 2.4 percent higher on the week.
The spot price of gold was up 0.2 percent on the day at $1,292.81 an ounce. For the week, though, it was down 3 percent. (Reporting by Herbert Lash and Barani Krishnan; Additional reporting by Jamie McGeever in London; Editing by Chris Reese and Leslie Adler)