* China data lifts stocks, oil and metals outlook
* Dollar holds modest gains after Yellen testimony
* Benign inflation data knocks New Zealand dollar
LONDON, July 16 (Reuters) - Stocks rose in Europe on Wednesday after China reported economic growth figures that were slightly stronger than markets had expected, although the reaction in Asia was more muted.
The world's second largest economy expanded at a 7.5 percent annual pace in the second quarter, the statistics bureau said, just beating the 7.4 percent median forecast in a Reuters poll.
The numbers, which also helped push crude oil and some industrial metals higher, confirmed the economy had stabilised after a shaky start to the year though analysts said the pick-up was largely driven by government stimulus.
The pan-European FTSEurofirst 300 equity index was up 0.6 percent, buoyed by mining stocks which strengthened in anticipation of demand from China.
"It confirms the trend we've seen from improving PMI data, and is in line with the idea of a pick-up in the global economy. That's positive for the mining sector," said James Butterfill, global equity strategist at Coutts.
The China data helped push Shanghai zinc and London aluminium close to their highest in more than a year.
MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.7 percent, however, and Tokyo's Nikkei share average ended 0.1 percent lower as investors took profit on Tuesday's gains.
"The GDP figure is in line with our expectation, but the underlying momentum and recovery is still at a fragile state, especially given the property market correction," said Chang Jian, a Hong Kong-based analyst at Barclays.
The Australian dollar, often seen as a proxy for Chinese growth, was down 0.2 percent against the U.S. dollar at $0.9345 .
The biggest mover in currency markets was the New Zealand dollar, which dropped 0.8 percent to a low of $0.8690 after benign inflation data that could reduce pressure on the central bank to tighten policy.
The U.S. dollar index, which values the greenback against a basket of currencies, was up 0.05 percent, clinging onto modest gains after Federal Reserve Chair Janet Yellen said on Tuesday that interest rates could rise sooner than expected if employment data improved.
The dollar was up 0.1 percent against the euro at $1.3558 and flat at 101.68 yen.
Sterling, which surged towards a six-year high against the dollar on Tuesday as a leap in inflation fuelled expectations the Bank of England could raise interest rates later this year, remained in focus before jobs and wage data due at 0830 GMT. It stood at $1.7138, having hit $1.7192 on Tuesday.
"With unemployment falling, business surveys printing at robust levels and now inflation close to the BoE's target level, any sign of wage growth will effectively put the icing on the cake as far as markets are concerned," said Peter Kinsella, currency strategist at Commerzbank.
Brent crude climbed above $106 a barrel after the Chinese data. It had hit a three-month low of $104.39 on Tuesday.
"Chinese economic data could be the catalyst to push Brent back up towards $108 a barrel," said Ben Le Brun, a market analyst at Sydney-based trader OptionsXpress.
Portugal remained the main focus among euro zone government bond markets. Concern over the exposure of Banco Espirito Santo, the country's largest listed lender, to the troubled companies of its founding family has been a main driver of trading in recent days.
The yields on Portugal's benchmark 10-year bond fell more than 20 basis points to 3.74 percent. Lisbon shares rose more than 1 percent, with Banco Espirito Santo shares up 6.84 percent.
Gold steadied after two days of losses but held near a four-week low thanks to the stronger dollar and worries the Fed could raise interest rates faster than expected. Spot gold was last at $1,298.10. (Additional reporting by Wayne Cole in Sydney, Alistair Smout in Edinburgh, Anirban Nag and Marius Zaharia in London; Editing by Catherine Evans)