GLOBAL MARKETS-Investors shrug off services data, stocks rise

* Stocks rise on defensive plays

* Record low service sector data lifts European govt bonds

* Consumer staples, pharmaceuticals lead stocks higher

* Dollar up on expected European interest rate cuts (Updates with U.S. data, prices, changes dateline and byline)

By Daniel Bases

NEW YORK, Dec 3 (Reuters) - Global stock markets rose on Wednesday, powered by defensive shares, as record contractions in U.S. and European service sector data sent European government bond yields to historic lows and raised hopes for lower interest rates.

U.S. government bonds, however, fell as stocks rose, as investors purchased shares of consumer staples such as Coca-Cola (KO.N) and Johnson & Johnson (JNJ.N).

Crude oil rose 1 percent after a U.S. government report showed an unexpected drop in fuel stocks in the United States, the world's biggest energy consumer.

Bleak services sector activity in November illustrated the recessions on both sides of the Atlantic while the ADP Employer Services report showed U.S. private employers cut a quarter of a million jobs last month. ADP's report suggests Friday's official jobs report will show losses of 300,000 jobs or more.

In the United States, the Institute for Supply Management's non-manufacturing index fell to a record low of 37.3 in November, from 44.4 in October. The level of 50 separates expansion from contraction.

"It's an extraordinarily steep decline for a measure of service sector activity," said Pierre Ellis, senior economist at Decision Economics in New York.

"The severe damage to the service industry is another indication of the extraordinary force of this recession," he said.

Services represent 80 percent of U.S. economic activity.

The Markit Eurozone Purchasing Managers Index for services companies, fell to 42.5 in November from October's 45.8 level, the lowest in the survey's 10-year history. (For more, see [ID:nL3261302].)

MSCI world equity index .MIWD00000PUS rose 1.08 points or 0.52 percent to 209.81.

Benchmark U.S. stock indexes were up in midday New York Trade. The Dow Jones industrial average .DJI rose 70.97 points, or 0.84 percent, at 8,490.06. The Standard & Poor's 500 Index .SPX gained 8.33 points, or 0.98 percent, at 857.14. The Nasdaq Composite Index .IXIC was up 22.65 points, or 1.56 percent, at 1,472.45.