GLOBAL MARKETS-Greece steps help euro, push debt premium down

* The euro rises vs dlr on Greece's tough austerity measures

* Greece's borrowing costs ease

* World stocks up for 4th day; European shares flat

By Dominic Lau

LONDON, March 3 (Reuters) - The euro rose against the dollar and Greek borrowing costs fell to their lowest level since mid-February as Greece's cabinet approved new steps to fight a budget deficit, seen as key to secure EU fiscal support.

European shares, however, were flat as traders said most of the news had been priced in and ahead of U.S. jobs data, though world stocks gained, on track to gain for the fourth consecutive day and near their five-week high.

In the commodity market, metal and crude prices advanced as the dollar <.DXY> eased against a basket of currencies.

The official details were only just emerging of the Greek cabinet's extra austerity measures. [ID:nATH005252]

But a government source earlier on Tuesday laid out the measures taken and told Reuters the total value was 4.8 billion euros ($6.5 billion) as Athens seeks to meet its fiscal targets and defuse a crisis that has lasted months. [ID:nLDE6220NA]

Investors also awaited the U.S. ADP Employment Report for February and Challenger U.S. jobs cut for February ahead of the all important non-farm payrolls on Friday.

"There is still some cautiousness in the market. Macroeconomic data hasn't been that great lately and people are afraid that some of today's economic numbers may come out lower than expected," said Koen De Leus, economist at KBC Securities.

"But I have an impression that optimism has returned and a lot of investors are now pretty confident that the problems in Greece are going to be solved."

Earlier, ratings agency Standard & Poor's said it is less pessimistic on Greece's debt crisis than financial markets and believes that debt problems of some euro zone countries pale in comparison with long-term challenges of population ageing. [ID:nSGE622099]

World stocks measured in MSCI All-Country World Index <.MIWD00000PUS> advanced 0.3 percent, gaining for the fourth day. The index is down 1.5 percent this year after rebounding more than 31 percent in 2009.

The pan-European FTSEurofirst 300 <.FTEU3> index was flat after gaining 0.8 percent on Tuesday, while Greece's share benchmark <.ATG> lost 1 percent.

U.S. stock index futures were mixed with the Dow Jones futures down 0.1 percent while the futures for S&P 500 and Nasdaq up 0.1 and 0.2 percent respectively.

Japan's Nikkei average <.N225> put on 0.3 percent.

EURO FIRMS

The euro was up 0.3 percent at $1.3660.

"The measures are largely positive as they are at the upper end of speculation ... so the euro is seeing a slight rally," said Elsa Lignos, currency strategist at RBC.

But she added that it was too early to tell whether the plans were enough to convince Greece's European Union partners that it can service its 300 billion euro mountain of debt.

"We're waiting to hear what the European reaction is going to be to the measures ... Although on the face of it the measures are at the upper end of speculation, we are still cautious."

The premium investors demand to buy 10-year Greek government bonds rather than benchmark German bunds fell to 291 basis points from 305 bps at the European settlement close on Tuesday. Last week, the spread was as wide as 371 bps.

Yields on other "safe-haven" bonds drifted higher. The 10-year Bund was up 3 basis points at 3.136 percent, while 10-year U.S. Treasuries were 1 basis point higher at 3.623 percent. (Additional reporting by Atul Prakash, Naomi Tajitsu, George Matlock and Ian Chua in London; Editing by Patrick Graham)