The signs of a steadier footing in China's economy coupled with recent good news from the United States on jobs have reassured investors that actions taken by the world's major central banks to boost activity are taking effect.

"There's definitely been a shift in investor sentiment towards the positive," said Richard Hunter, head of UK equities at Hargreaves Lansdown.

But the better mood was being held in check by worries about progress on measures to tackle Europe's three-year old debt crisis, as leaders from the 27-nation European Union gather in Brussels for a two-day summit.

The FTSE Eurofirst 300 .FTEU3 index of top European shares was barely changed at around 1119.15 points but was still holding close to its best levels in nearly a month.

The same was true of London's FTSE 100 .FTSE, the French CAC-40 .FCHI and Frankfurt's DAX .GDAXI, which were all stuck in narrow ranges near Wednesday's closing levels.

European leaders will try to bridge deep differences over plans for a banking union at their summit on Thursday, but no substantial decisions are expected, while moves to help Spain, Greece and Cyprus may only come at a finance ministers' meeting next month, officials have told Reuters.

Spain remains the most immediate focus of concerns, with the market expecting it to formally ask for assistance from the European Union very shortly, clearing the way for the region's central bank to begin buying its bonds.

The euro was slightly lower ahead of the summit at $1.3095, having risen to $1.3140 on Wednesday, a level not seen since mid-September.

"We are expecting some more upside in the euro as investors seem to get comfortable with the timeline about when Spain will seek a bailout and the ECB's bond buying will be triggered," said Beat Siegenthaler, currency strategist at UBS.

The expectation that help for Spain is not far away underpinned demand for Spanish debt, already boosted by Moody's decision on Tuesday to affirm the country's investment grade credit rating, at an auction on Thursday of 4.6 billion euros of fresh debt.

CHINA RELIEF

Meanwhile, growth and commodity-sensitive assets were seeing good gains on the latest batch of Chinese figures.

China's third-quarter gross domestic product grew 7.4 percent from a year earlier, the slowest pace since the first quarter of 2009 but in line with expectations, while other data such as a 9.2 percent rise in industrial output for September exceeded forecasts.

The Australian dollar, which is highly correlated to China's economic performance, touched a two-week high of $1.0397 after the data, and last traded at $1.0380.

"The data for September suggests China's economy likely bottomed in July-August and is set to recover, and this will help ease fears about further downside risks to the Chinese economy," said Hirokazu Yuihama, a senior strategist at Daiwa Securities.

"There aren't clear signs that demand from China is picking up, but sentiment for commodities is improving, and this should eventually support growth-sensitive assets," he said.

Even the dollar rose, touching a one-month high of 79.22 yen, after data on Wednesday showed the U.S. housing market improved sharply in September, leaving the Japanese currency to take the brunt of investor selling.

Among commodities, Brent crude oil was up about 10 cents a barrel at $113.32, with geopolitical worries in the Middle East supporting prices.

Spot gold was trading nearly flat at $1,750 an ounce as investors preferred to wait for the outcome of the EU summit.

(Additional reporting by Anirban Nag; Editing by Will Waterman)

• A Permanent Economic Emergency