GLOBAL MARKETS-Stocks rise on Obama; dollar off highs

By Tamawa Desai

LONDON, Jan 28 (Reuters) - Global shares rose on Thursday as investors pursued riskier assets after U.S. President Barack Obama focused on job creation rather than any concrete details of banking reforms which had spooked financial markets.

European stocks bounced backed from a one-week slide, but gains were hampered by concerns about the fiscal health of smaller euro zone countries such as Greece and Portugal, whose government bonds continued to take a hammering.

Market optimism after Obama's first State of the Union speech late on Wednesday pulled the dollar off five-month highs hit after the U.S. Federal Reserve kept its low interest rate policy intact as expected but saw one policymaker dissent.

Wall Street looked to open higher as U.S. stock futures rose 0.2 percent . World stocks as measured by MSCI <.MIWD00000PUS> were 0.3 percent higher on the day.

"(Obama) held off from being as aggressive as he has been towards Wall Street," said David Morrison, market strategist at GFT Global. "The result was that the market was a lot happier."

The U.S. administration's proposals last week on restricting risk-taking and potentially breaking up the banking sector had fuelled a global market sell-off.

European shares <.FTEU3> gained 0.6 percent by midday trade, after rising some 1.3 percent earlier.

Concerns about Greece and other peripherals weighed on the euro , as the spread between Greek and German government bonds hit a record high since the single European currency was launched more than a decade ago.

Budget proposals from the Portuguese government on Wednesday failed to reassure ratings firms [ID:nLDE60R0RX] [ID:nLDE60R0GZ] and the premium to hold Portuguese debt compared with benchmark German bonds also rose.

Credit default swaps, which indicate the cost of insuring government bonds against default, also rose for both countries.

"Sentiment definitely remains negative for the euro because of the Greece problem," said Lutz Karpowitz, currency strategist at Commerzbank in Frankfurt.

"I thought the Greece story would eventually die down, but that doesn't seem to be the cause, and there are more countries in the pipeline (who are facing debt problems)."

BERNANKE EYED

The U.S. Federal Reserve kept interest rates steady and gave a cautiously upbeat view on the economy. Markets will eye an expected vote on Fed chief Ben Bernanke's second term in the Senate on Thursday.

In Europe, German unemployment came in much better than forecast while European Central Bank Executive Board member Gertrude Tumpel-Gugerell said it was time fiscal and monetary policy returned to "normal".

Central banks are cutting back on the excess liquidity pumped into the financial system after 2008's banking turmoil and markets are looking for signs of how fast the ECB and others may complete the process and start to raise interest rates.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was flat on the day at 78.700 <.DXY>. It rose as far as 79.066, its highest since August last year.

Bernanke had been widely seen as getting the support he needs but a recent surge of public anger at big banks has meant the vote could be a lot closer than expected. His terms as chairman runs out on Sunday.

Data due out include U.S. durable goods orders which are expected to show a rise in December, and weekly jobless claims.

U.S. crude oil futures rose above $74 a barrel, rebounding from six-week lows [O/R], while gold firmed after the dollar eased. (Additional reporting by Harpreet Bhal and Naomi Tajitsu; editing by Patrick Graham)