* Stocks rise on Spanish cuts, German growth
* Euro creeps higher as austerity measures debated
* Gold sets record high at $1,244.45 per ounce (Updates with opening of U.S. markets)
By Albert H. Yoon and Jeremy Gaunt
NEW YORK/LONDON, May 12 (Reuters) - World shares climbed and the euro strengthened on Wednesday as Germany's economy continued to grow and Spain outlined measures to cut its deficit.
MSCI's all-country world stock index <.MIWD00000PUS> climbed nearly 1 percent, led by Europe, where the FTSEurofirst 300 <.FTEU3> index gained 1.4 percent.
The bullish trading comes two days after world shares soared nearly 5 percent following an agreement by the European Union and the International Monetary Fund on a 750 billion euro rescue package to put an end to Greece's debt crisis. The steps, for the moment, reduced speculation that other euro-zone nations would face the same predicament as Greece.
Investors have feared a debt crisis in Greece could spill over to other euro-zone nations with high borrowings, including Spain. That concern eased as Spain Prime Minister Jose Luis Rodriguez Zapatero said Madrid would slash civil service pay by 5 percent this year, freeze it in 2011 and cut 13,000 public sector jobs this year to meet European Union deficit targets.
"There are certainly those people who will see the steps taken in Europe as a replay of the type of steps taken in the United States following the Lehman collapse," said Rick Meckler, president of investment firm LibertyView Capital Management in New York. "Ultimately that proved to be successful in the short run for markets."
The EU/IMF plan has drawn a line under the worst fears about a spread of the euro zone debt crisis, leaving investors to look at what countries are doing to improve their finances. Lingering doubts that the measures will work sparked a flight to gold, which hit a record high on Wednesday.
The Dow Jones industrial average <.DJI> rose 82.15 points, or 0.76 percent, to 10,830.41. The Standard & Poor's 500 Index <.SPX> increased 9.32 points, or 0.81 percent, to 1,165.11 and the Nasdaq Composite Index <.IXIC> gained 26.72 points, or 1.12 percent, to 2,402.03.
Materials shares supported the market, with
Freeport-McMoRan Copper and Gold Inc
As investors shift attention from Europe's sovereign debt troubles, the focus will return to the U.S. economic recovery, though analysts predict choppy trading.
"The market has been increasingly conditioned to buy on the dips now that the situation in Europe has been not resolved but certainly stabilized in the short term," said Craig Peckham, equity trading strategist at Jefferies & Co in New York.
EURO FIRMS
The euro
Germany's GDP grew for the fourth quarter in a row in the first three months of 2010, data showed on Wednesday.
Gains in the euro were limited, however, as investors remain worried about whether weaker euro zone economies can deliver debt cuts and the impact of austerity measures on European growth.
The dollar rose against a basket of major trading-partner currencies, with the U.S. Dollar Index <.DXY> up 0.13 percent at 84.57. Against the Japanese yen, the dollar
U.S. Treasuries prices fell on Wednesday as the euro zone's attempts to stanch its budget crisis helped stabilize stock markets and traders braced for a 10-year bond auction.
Benchmark 10-year Treasury note yields rose 0.04 percentage point to 3.57 percent.
In energy and commodities, U.S. light sweet crude oil