* Downbeat PMI surveys raise hopes of more steps from Beijing, ECB
* European stocks rise for 4th day to extend best run of year
* Euro zone price data reinforce ECB easing expectations
* Oil at highest since start of year
* Wall Street expect to open up 0.5 pct ahead of data deluge
By Marc Jones
LONDON, March 1 (Reuters) - European shares extended their strongest run of the year on Tuesday and the euro touched its lowest in almost three years against the yen, as data from around the region bolstered the case for more ECB stimulus next week.
Wall Street ESc1 was expected to rebound 0.6 percent when it resumes, with a deluge of data to feed the debate on whether the Federal Reserve will be able to squeeze up U.S. interest rates any further this year. .N
Asia had risen as weak China data fanned hopes for more stimulus there, and it was the same story in Europe as euro zone manufacturing activity expanded at its weakest pace for a year despite more deep discounting and slumped to a near three-year low in Britain. Purchasing Managers' Index (PMI) data will make particularly gloomy reading for the European Central Bank, a day after it was confirmed deflation is back in the euro zone and just over a week before its next meeting.
Pressure for firm action is building, and the expectation is that it will cut its already negative deposit rate by at least another 10 basis points when it meets next Thursday ECBWATCH and add to its 1.5 trillion euro bond buying scheme.
Those hopes helped Germany's DAX .GDAXI jump 1.4 percent and France's CAC 40 .FCHI climb 0.6 percent, while Britain's FTSE 100 .FTSE gained 0.5 percent as talk of a bid battle for the London Stock Exchange helped offset an 11 percent beating for Barclays' shares BARC.L . .EU
In the currency markets, the euro steadied having hit a one-month low after the PMI data, while the yen was still hot to the touch having just had its best month against the dollar JPY= since 2008 and risen to its highest against the euro EURJPY= since April 2013. FRX/
The gains came despite Japan earlier becoming the first G7 economy to sell a 10-year government bond at a negative yield, something that would usually make the currency less attractive as investors are effectively paying rather than getting paid to hold them. yen strength right now is largely being dominated by (weak) risk appetite," said UniCredit's Global Head of FX Strategy Vasileios Gkionakis.
On the euro he added: "There is no doubt the low inflation and the soft economic data is keeping the pressure on the ECB to do something next week."
There was a glimmer of hope for the central bankers though as Brent oil prices LCOc1 , the big downward force on inflation for the last two years, hit their highest since the start of the year after their best month since August. O/R
It was an additional boost for commodity stocks .SXPP and helped German Bund yields nudge off 10-month lows after the previous day's deeper than expected fall in euro zone consumer prices had triggered a fresh round bond buying. EUIL5YF5Y=R
CAUTION FRAGILE CHINA
U.S. manufacturing and services sector data ECONG7 due out at 1445 GMT (0945 E.T.) will feed the constantly evolving view 0#FF: of whether the Federal Reserve can continue to squeeze up interest rates in the world's largest economy this year.
The latest rise in oil helped Russian dollar-denominated shares .IRTS add 2 percent to their near 30 percent surge since mid-January. EMRG/FRX
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS had ended up 1.3 percent too, as Chinese stocks, .CSI300 which are nudging their lowest in a year, climbed 1.8 percent after Monday's PBOC cut in banks' reserve requirements.
There was a widespread feeling more stimulus is likely too when Beijing announces a new 5-year plan for the economy at the weekend. data on Tuesday showed activity in the country's giant manufacturing sector shrank for a seventh straight month in February and faster than expected.
The services sector did expand, but at the slowest pace since late 2008 and the private Caixin/Markit China Manufacturing PMI came in short of both market expectations and the previous month's reading. think the PBOC easing is consistent with continued weaker-than-expected economic activity and downside risks to growth," wrote Jian Chang, an analyst at Barclays . "It should help to support market sentiment in the near term."
Japan's Nikkei .N225 erased early losses to end up 0.4 percent although the yen's hot streak continued to drag back a market that has slumped 15 percent this year.
Against the euro, the perceived safe-haven yen gave back some territory as the PMI dust settled to leave it at 123.07 yen EURJPY=R . It had been as elevated as 122.09, the highest since April 2013.
The dollar was buying 113 yen JPY= , edging up about 0.4 percent, while the Australian dollar added 0.3 percent against its U.S. counterpart to $0.7163 AUD=D4 after the Reserve Bank of Australia left its rates at a record low 2 percent. also rose to $1,240 XAU= an ounce as it built on its biggest monthly gain in four years. Its appeal is being boosted by the concerns over the global economy and the spread of negative government bond yields in Europe and Japan. GOL/