GLOBAL MARKETS-US GDP lifts dollar, stocks, commodities

* U.S. economy up 5.7 pct in Q4, fastest in 6 years

* Dollar, European stocks and commodities rise

* Newspapers report EU considering Greek bailout

* EU, Greek officials deny any such plans

By Dominic Lau

LONDON, Jan 29 (Reuters) - The dollar gained, U.S. stock index futures rose and commodity prices firmed on Friday after the U.S. economy grew stronger-than-expected in the last quarter of 2009, the quickest pace in more than six years.

The world's largest economy expanded 5.7 percent in the fourth quarter, as business reduced inventories less aggressively. [ID:nN28120005]

European stocks also extended gains on the upbeat report, helping the MSCI All-Country World Index <.MIWD00000PUS> to trade flat after losses in Asian shares on worries over Greece's fiscal position, and safe-haven government bonds fell.

"Wow, great number. It's very solid and gives us a running start into the second half of the year when we can't rely on government stimulus," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.

"That's part of the plan, to get us moving as fast as possible so when life support is removed we'll have a pulse."

U.S. stock index futures rose further after the GDP data, up 0.6-1 percent, while the pan-European FTSEurofirst 300 <.FTEU3> advanced 1.2 percent.

Equities markets were aided by newspaper reports that the European Union was considering bailing out Greece. But EU and Greek officials firmly denied the idea.

Greece's benchmark <.ATG> put on 2.1 percent.

The Financial Times quoted what it said were high-level EU officials as saying Greece would as a last resort receive emergency support from other euro zone governments and the European Commission.

EU monetary affairs chief Joaquin Almunia said there was no risk that Greece would default or leave the euro zone and Finance Minister George Papaconstantinou said Greece was not involved in bailout talks. [ID:nLDE60S0XN]

Markets' suspicion that something was in the works, though, helped the Greek/German 10-year government bond yield spread tighten.

The premium investors demand to hold Greek government bonds rather than benchmark German Bunds narrowed to 374 basis points from 396 bps in late Thursday trade. The spread blew out to a record 405 bps on Thursday on investor fears that Athens may not be able to service its heavy debt.

Financial markets are gripped by the fear Athens will not be able to service its heavy debt, putting pressure on the euro and even raising speculation as to whether Greece could be forced out of the currency bloc.

The dollar <.DXY> was up 0.2 percent against a basket of major currencies and was up 0.8 percent to 90.62 yen.

The euro eased 0.2 percent to the U.S. currency at $1.3947. Earlier, the euro hit a six-month low versus the dollar and a nine-month low towards the yen on concerns over Greece saga.

Investors have also been nagged this week by fears that the global economic recovery may be losing momentum, China's steps to cool its surging economy and political and regulatory wrangling in Washington.

Overnight the U.S. Senate backed Ben Bernanke for a second four-year term running the Federal Reserve. [ID:nN27143856]

Yields on benchmark 10-year U.S. Treasuries were up 3 basis point at 3.668 percent, while those on 10-year Bunds were up 1 basis point at 3.209 percent. Crude prices rose more than 1 percent at $74.60 a barrel, while copper prices was flat after trading lower earlier. (Additional reporting by Lucia Mutikani; Editing by Andy Bruce)