GLOBAL MARKETS-Shares up on China relief, Ukraine strains remain

* China GDP grows 7.4 pct y/y, just pipping forecasts

* Markets relieved growth was not much weaker

* European shares rebound, Wall Street seen up 0.3-0.5 pct

* Nikkei leads the pack after 3 pct jump, EM inches higher

* Ukraine tensions simmer

By Marc Jones

LONDON, April 16 (Reuters) - Share (LSE: SHRE.L - news) markets made broad gains

on Wednesday after China reported economic growth a touch above

forecasts and another low euro zone inflation reading spurred

speculation about the European Central Bank's policy options.

China's economy grew 7.4 percent in the first quarter, from

a year earlier, pipping forecasts of 7.3 percent and dashing

speculation beforehand that growth would be nearer 7 percent

after a string of recent soft numbers.

The relief rippled through Asian markets, with Japan's

Nikkei ending up 3 percent - its biggest gain since

February. Hopes of more Bank of Japan stimulus also helped.

Bullish sentiment spread to Europe with the DAX and

France's CAC 40 both up 0.9 percent and the FTSE 100

0.4 percent higher as mining companies - among the most

sensitive to Chinese data - regained ground.

Italy and Spain also rallied, with Milan 2

percent higher and Madrid up 1 percent as both clawed back some

of the 5 percent they have lost over the last week.

"Our basic view is that it will be a gradual slowdown (in

China) rather than a hard landing," Rabobank emerging market

economist Christian Lawrence said.

While East-West tensions over Ukraine are keeping markets

cautious, the mood had already been lifted by a late rally on

Wall Street on Tuesday, largely thanks to some solid earnings.

Futures prices pointed U.S. stocks resuming 0.3-0.5

percent higher That was despite pre-opening bell news of more

legal costs and lower earnings at Bank of America (TLO: BAC.TI - news)

Global giants Google (NasdaqGS: GOOG - news) and IBM (NYSE: IBM - news) also report

later, while markets face another test when Federal

Reserve Chair Janet Yellen speaks on monetary policy and the

economic recovery at the Economic Club of New York (Frankfurt: HX6.F - news) at 1625 GMT.

Sentiment may get a lift if she offers reassurance that any

rise in interest rates will come well after the Fed ends its

asset-buying programme.

EURO FIGHTER

UK employment and earnings numbers sent sterling

marching back towards its recent highs, as a five-year low in

unemployment and a pick-up in wage growth reheated talk of a

Bank of England rate hike early next year.

In the euro zone, where the European Central Bank is leaning

in the other direction and talking about more rate cuts and

unconventional policy, inflation was confirmed at a meagre 0.5

percent in March. .

The euro took little notice, however, rising 0.2

percent to $1.3837. There were also more bond gains for former

trouble spots Italy, Spain, Portugal and Greece.

"It's concerning (ECB President) Mario Draghi is already

making comments about the strength of the euro," said Bill

Street, head of EMEA investments at State Street Global

Advisors. "There is nothing he can do about it. I don't even

think aggressive policy intervention is going to work."

SHOW OF FORCE

Capping the upbeat mood were mounting risks in Ukraine after

Russia declared the country to be on the brink of civil war and

Kiev said an "anti-terrorist operation" against pro-Moscow

separatists was under way.

Ukrainian government forces and pro-Russian rebels staged

rival shows of force in eastern Ukraine on Wednesday, though

hopes remained that talks in Switzerland on Thursday between

Ukraine, Russia, the U.S. and EU could cool the situation.

In currency markets, apart from sterling, the majors were

confined to tight orbits with the euro a fraction higher

and the dollar edging up to 102.25 yen.

The main mover was the New Zealand dollar which took a spill

after inflation registered a surprisingly low 1.5 percent in the

first quarter. That prompted markets to pare back expectations

on how far and fast interest rates might rise there.

The kiwi fell to its lowest in more than a week at $0.8587

, and dragged down its Australian counterpart to $0.9359

.

In commodities, gold was pinned at $1,303 an ounce,

well off Monday's peak at $1,330.90. It had tumbled about 2

percent on Tuesday on heavy stop-loss orders placed by momentum

traders as prices broke below the key 200-day moving average.

Benchmark Brent oil rose 70 cents to a five-week high of

$110.06 on developments in Ukraine and the China data,

while U.S. crude futures were up a dollar at $104.7594.

"The situation in eastern Ukraine has deteriorated in the

past couple of days," Harry Tchilinguirian, head of commodity

markets strategy at BNP Paribas (Milan: BNP.MI - news) , said. "And no one is pricing in

economic sanctions."

(Additional reporting by Lin Noueihed in London and Wayne COle

in Sydney; Editing by Louise Ireland/Ruth Pitchford)