Growth hopes underpin European shares

Traders work at a bank market room in Lisbon February 15, 2012.

LONDON (Reuters) - European shares opened near five-month highs as a brighter global economic outlook fuelled investor risk appetite, underpinning the dollar and reducing the appeal of safe-haven government debt.

Improving U.S. economic data and a signal from the Federal Reserve that it was not planning further monetary easing measures for now sent 10-year U.S. Treasury note yields to 4-1/2 month highs, although a rally in global stock markets looked to be pausing after major indexes made big gains on Wednesday.

"Investor sentiment has completely changed. In the past, people were expecting (U.S.) growth of around 1.5 percent but now they say growth could top three percent," said Hiroshi Yokotani, director of fixed income at Alliance Bernstein.

The FTSE Eurofirst index of top European shares opened little changed at 1096.50 after closing on Wednesday at an eight-month highs.

The MSCI world equity index was also barely changed with worries about the Chinese growth outlook limiting gains in Asian markets.

The dollar rose to an 11-month high of 84.187 yen before stabilising at around 82.75 yen, little changed on the day. The euro was hovering near one month lows just above $1.30 against the dollar at $1.3004.

German government bond yields gained in line with moves in U.S. Treasury market, with 10-year debt yielding 1.98 percent, up 2.3 basis points, a day after strong demand at an Italian debt auction took the shine off safe-haven debt.

Euro zone peripheral peer Spain will be in focus on Thursday as it looks to sell up to 3.5 billion euros in bonds, also likely to be strongly supported despite a tussle with euro zone partners over lowering its deficit-cutting targets.

The UK market will also be in the spotlight after Fitch Ratings revised down its outlook on Britain's AAA rating to "negative", warning the country faced a greater than 1-in-2 chance of losing its top-notch rating.

(Editing by John Stonestreet)