* Volume weakest so far in 2013 for a full trading day

  * Apple and Facebook rally, helping Nasdaq end with a slim gain

  * Compugen shares soar on Bayer partnership

  * Dow down 0.3 pct, S& P 500 off 0.2 pct, Nasdaq up 0.1 pct

  By Rodrigo Campos

  NEW YORK, Aug 5 (Reuters) - The Dow and the S& P 500 dipped on Monday in the thinnest volume so far this year, following their record closing highs last week as a lack of major news left the market directionless.

  Although about 100 companies in the S& P 500 are still scheduled to report earnings, the season is winding down sharply after last week's deluge. The week is also thin in terms of market-moving macroeconomic data.

  " It was a pretty quiet day," said Paul Zemsky, head of asset allocation at ING Investment Management in New York. " We're almost done with earnings, and the quarter will remain lackluster. It's hard to disappoint, but earnings are not fantastic."

  About 4.6 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, the lowest for a full day of trading so far this year. Daily volume has averaged about 6.4 billion shares this year. Last year, August posted the lowest monthly average volume on U.S. exchanges.

  The technology sector was the S& P 500's best performer. A rally in Apple and Facebook shares helped the Nasdaq Composite Index finish Monday's session with a slim gain. Apple rose 1.5 percent to $469.45 after the United States overturned a ban on the sale of some older iPhones and iPads. Facebook, which was the Nasdaq's most actively traded stock, jumped 3 percent to $39.19 after a brokerage upgrade.

  Data suggesting economic recovery in the UK and U.S. economies was improving showed British businesses boomed and activity at euro-zone companies expanded modestly in July, while growth in the U.S. services sector rebounded from a three-year low.

  " PMIs were better than people thought, and that tells us this idea that the second half could be stronger is still valid. But right now, it's just wait and see," Zemsky said.

  The Dow Jones industrial average fell 46.23 points or 0.3 percent, to end at 15,612.13. The S& P 500 slipped 2.53 points or 0.15 percent, to finish at 1,707.14. But the Nasdaq Composite Index added 3.364 points or 0.09 percent, to close at 3,692.951.

  United Technologies Corp and The Travelers Companies were the Dow's biggest percentage decliners. United Technologies shares slid 1 percent to $106.64, while Travelers shares fell 1 percent to $83.15.

  The Washington Post Co. shares shot up 3.8 percent after the bell following news that Amazon Inc & lt AMZN.O& lt founder Jeff Bezos has agreed to pay $250 million to buy the publishing company's newspaper assets, including its flagship paper - known for its coverage of the Watergate break-in that led to the resignation of President Richard M. Nixon in 1974.

  Washington Post Co. Class B shares ended the regular session at $568.70, up 1.6 percent, after climbing to an intraday high at $576, their highest level in more than four years.

  The S& P 500 has risen for five of the past six weeks, gaining more than 7 percent over that period. The index closed at an all-time high on Friday despite a mixed reading on the labor market, which showed that hiring slowed in July, but the U.S. unemployment rate ticked lower.

  Friday marked the second day in a row for the Dow and the S& P 500 to end at record closing highs, with the Dow ending at 15,658.36 and the S& P 500 at 1,709.67.

  The slip in the unemployment rate means that the Federal Reserve is closer to dialing back its $85 billion-a-month bond-buying program, Dallas Federal Reserve Bank President Richard Fisher said on Monday. The stimulus program is given credit for a large part of this year's rally in the U.S. stock market.

  On the earnings front, shares of Tyson Foods climbed 4.1 percent to $29.69, a record closing high, after giving a full-year revenue outlook that exceeded expectations.

  In contrast, U.S.-listed shares of HSBC Holdings Plc fell 4.5 percent to $55.37 after the company reported a drop in revenue, hurt by slower emerging markets.

  Shares of retailer Fossil dropped 6 percent to $107.42 on three times their recent average volume after Barclays downgraded the stock to " underweight."

  Of the 391 companies in the S& P 500 that have reported earnings for the second quarter, 67.8 percent have topped analysts' expectations, in line with the average beat over the past four quarters, data from Thomson Reuters showed. About 55 percent have reported revenue above estimates, more than in the past four quarters but below the historical average.

  U.S.-listed shares of Compugen Ltd soared 44.5 percent to $7.89 after the company said it would enter into a cancer research partnership with Bayer AG .

  Declining issues outnumbered advancers on the NYSE by a ratio of about 3 to 2. On the Nasdaq, the opposite trend prevailed, with 14 stocks rising for about every 11 that fell.

* Key 7-day money rate slumps 20 bps to 4.15 pct
* C.bank injects 12 bln yuan into market, yield at 4 pct
* Stable money rates seen

SHANGHAI, Aug 6 (Reuters) - China's money rates fell
slightly on Tuesday after the People's Bank of China (PBOC)
injected funds through open market operations, bolstering
confidence that the central bank is maintaining rate stability.
The PBOC injected 12 billion yuan ($1.96 billion) into the
money markets through seven-day reverse bond repurchase
agreements on Tuesday.
Dealers said they interpreted the injection - smaller than
all recent ones - as a signal that the central bank is guiding
rates back down slowly but intends to keep them relatively
tight.
The central bank set the official seven-day reverse repo
guidance rate at 4.0 percent, down from last week's 4.40
percent.
The benchmark weighted-average seven-day bond repurchase
rate slumped to 4.15 percent near midday, down 20
basis points from the previous close of 4.35 percent.
The overnight rate was little changed to 3.12
percent from Monday's close of 3.11 percent, while the 14-day
tenor rose to 4.54 percent from its close of 4.39
percent on Monday.

Current Prev close Change
(pct) (bps)
7-day repo 4.1459 4.3470 -20.11
7-day SHIBOR 4.0660 4.3560 -29.00
Note: Repo rate is weighted average.


> > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > >

MARKET DRIVERS
- Capital outflows, slowing growth fuel monetary easing
debate
- CHINA MONEY-Tighter interbank regulation seen after cash
squeeze
- Collapse in China bond volumes exposes market's seamy side

- China reform push means June turmoil may be just the
beginning

DATA POINTS
- External liquidity tracker: Collapse in FX purchases
hurts liquidity in May http://link.reuters.com/pem75t
- Impact of maturing central bank bills and repos GRAPHIC: http://link.reuters.com/pem75t
- Chinese government bond curve flattens on liquidity
squeeze, growth concerns GRAPHIC: http://link.reuters.com/jyr95t
- China's interest-rate swap curve is inverted on severe
liquidity squeeze GRAPHIC: http://link.reuters.com/ryr95t
- China corporate bond spreads have narrowed slightly
GRAPHIC: http://link.reuters.com/bas95t
- Hot money tracker: Hot money inflows have returned in
2013, boosting liquidity GRAPHIC: http://link.reuters.com/saz74t


> > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > >

(Editing by Richard Borsuk)

* Initial jobless claims fall more than expected

  * All 10 S& P 500 sectors higher, financials leading gains

  * Pioneer Natural Resources jumps after results

  * Indexes up: Dow 0.8 pct, S& P 1.1 pct, Nasdaq 1.1 pct

  By Alison Griswold

  NEW YORK, Aug 1 (Reuters) - The S& P 500 surpassed 1,700 on Thursday and U.S. stocks rose after economic data pointed to a modestly improving economy and the Federal Reserve kept its massive monetary stimulus in place.

  In its latest policy statement on Wednesday, the Federal Reserve gave no hint that a reduction in the pace of its bond-buying program was imminent, as the economy continues to recover but is still in need of support.

  Global central banks on Thursday also remained accommodative with European Central Bank President Mario Draghi reiterating the ECB's rates will remain at their present level or lower for an " extended period" of time.

  Data on weekly U.S. initial jobless claims and national manufacturing came in better than expected, while construction spending dropped 0.6 percent in June, below forecasts calling for a 0.4 percent rise.

  " This morning we got some tremendous data in the U.S.," said John Brady, managing director at R.J. O'Brien & Associates in Chicago. " The ISM manufacturing number was very strong, and that's led to a further move upward in equity prices."

  Stocks advanced broadly, with all of the 10 S& P 500 industry sectors moving higher. Growth-sensitive financials, industrials and consumer discretionary shares registered the biggest gains.

  JPMorgan Chase, Bank of America and Wells Fargo were among the companies giving the greatest boost to the S& P 500. Shares of JPMorgan gained 1.7 percent to $56.70, Bank of America rose 2.2 percent to $14.92 and Wells Fargo added 1.6 percent to $44.21.

  The S& P 500 financial index was up 1.6 percent.

  The Dow Jones Industrial Average rose 123.22 points, or 0.79 percent, to 15,622.76. The Standard & Poor's 500 Index climbed 18.03 points, or 1.07 percent, to 1,703.76, and the Nasdaq Composite Index added 38.50 points, or 1.06 percent, to 3,664.87.

  Earlier in the session, the benchmark S& P rose to a new intraday high of 1,704.97.

  Yelp Inc surged 22.8 percent to $51.31 after the consumer reviews website posted a smaller-than-expected quarterly loss and forecast third-quarter revenue above analysts' expectations.

  Pioneer Natural Resources was the S& P 500's biggest percentage gainer after reporting its second-quarter results. The company's shares jumped 13.3 percent to $175.35, after hitting an all-time high of $180.99 earlier in the session.

  On the downside, Exxon Mobil Corp dipped 1.8 percent to $92.04, the biggest drag on the Dow and the S& P 500, after reporting a sharp drop in quarterly profit on lower oil and gas output production and weaker earnings from its refining business.

  Of the 375 companies in the S& P 500 that have reported earnings for the second quarter, 67.5 percent have topped analyst expectations, in line with the average beat over the past four quarters, data from Thomson Reuters showed. About 55 percent have reported revenue above estimates, above the average beat of the past four quarters but below the historical average.

  Weekly initial jobless claims data showed a drop of 19,000 to a seasonally-adjusted 326,000, the lowest since January 2008 and better than the 345,000 forecast.

  The drop in initial claims, coupled with Wednesday's better-than-expected ADP employment report, bodes well for payrolls data on Friday.

  The Institute for Supply Management said its index of national factory activity rose to 55.4 in July, its highest level since June 2011.

  Financial data firm Markit said its final U.S. Manufacturing Purchasing Managers Index for July rose to 53.7, the highest since March.

(Corrects paragraph 9 to note 4.7 percent is Fitch estimate and give c.bank's preliminary figure)

  KUALA LUMPUR, July 30 (Reuters) - Ratings agency Fitch cut its outlook on Malaysia's sovereign debt to negative on Tuesday, citing gloomier prospects for reforms to tackle the Southeast Asian country's rising debt burden following a divisive election result this year.

  The revision from a stable outlook adds to concerns over Malaysia's high debt pile at a time when the currency has been pressured by bond fund outflows and talk of the U.S. Federal Reserve ending its easy monetary policy.

  Rival ratings agencies Standard and Poor's and Moody's both have a " stable" rating on Malaysia's sovereign debt.

  " Prospects for budgetary reform and fiscal consolidation to address weaknesses in the public finances have worsened since the government's weak showing in the May 2013 general elections," Fitch said in a statement.

  " Malaysia's public finances are its key rating weakness."

  The long-ruling Barisan Nasional coalition retained power in May elections, but saw its parliamentary majority weakened in a vote that exacerbated racial divisions in the multi-ethnic country.

  Prime Minister Najib Razak, who could face a ruling party leadership challenge in October, has anounced no fresh steps to cut the fiscal deficit, such as a long-anticipated consumption tax or a reduction in the government's heavy subsidies for fuel and food.

  Fitch noted that petroleum revenues make up a third of Malaysia's government revenues, in line with Mexico, a country that has a lower rating of BBB+. Malaysia has a long-term foreign debt rating from Fitch of A-.

  Persistent high deficits have pushed the federal government's debt to 53.3 percent of gross domestic product at the end of last year from 39.8 percent at the end of 2008. Malaysia has targeted a reduction of its budget deficit to 3 percent by the end of 2015, from what Fitch estimated was 4.7 percent last year. The central bank has given a preliminary estimate of 4.5 percent for 2012.

  The ringgit currency weakened slightly after the Fitch statement, falling 0.2 percent to 3.2310 per dollar by 0907 GMT. Before the revision, the ringgit was around Monday's close of 3.2260.

  Earlier on Tuesday, it fell to 3.2365 per dollar, its weakest since July 1, 2010, pressured by bond outflows. It touched 2.5520 to the Singapore dollar, the weakest since July 1998. (Reporting by Stuart Grudgings Additional reporting by Anuradha Raghu and Umesh Desai Editing by Clarence Fernandez)

* Malaysia PM commits to strengthening fiscal position
* Ringgit up on lower yields, short-covering
* Indonesia July CPI higher than expected, exports down
* Exporters support won offshore funds limit upside

(Adds text, updates prices)
By Jongwoo Cheon
SINGAPORE, Aug 1 (Reuters) - Most emerging Asian currencies
rose on Thursday on stronger-than-expected China manufacturing
data, and as the U.S. Federal Reserve gave no new clue whether
it might start scaling back monetary stimulus after its next
meeting in September.
The Indonesian rupiah, however, failed to match
the region's bullish mood, hitting a four-year low on
faster-than-forecast inflation and disappointing exports.
The Malaysian ringgit rose on Prime Minister Najib
Razak's pledges to improve Malaysia's fiscal position, while the
South Korean won gained on exporter demand.
The Fed said after its policy meeting that it would keep
buying $85 billion in mortgage and Treasury securities per month
and noted the potential dangers of inflation running too low.

Growth in China's factory sector picked up slightly in July
from June on a rise in new orders, an official survey showed
earlier, a sign the world's second-largest economy could regain
some strength in the second half of 2012.
" Asian currencies are unlikely to weaken like July as I
don't see big U.S. policy risks until September FOMC," said Yuna
Park, a currency and bond analyst at Dongbu Securities in Seoul,
referring to the Federal Open Market Committee meeting.
" Still, it does not mean Asian currencies will rise further,
given a potential Fed exit within this year and China worries,"
Park added.
Most emerging Asian units fell in July due to concerns over
the Fed's policy shift and a slowing China economy.
Investors are closely watching U.S. July non-farm payrolls
data due on Friday, which is expected to show a net 184,000 jobs
increase, for clues on timing of the Fed's cut in stimulus.
On Wednesday, the ADP National Employment Report showed that
U.S. companies added 200,000 jobs last month, topping
economists' expectations.
U.S. economic growth also unexpectedly accelerated in the
second quarter, cementing expectations that the Fed may be a
step closer to scaling back its quantitative easing.



RINGGIT
The ringgit advanced as Najib told a news conference that
his government was committed to improving the country's fiscal
position and would announce steps to do so in his next annual
budget speech in October.
Investors covered short positions after
stronger-than-expected China official PMI, the dovish Fed
statement, and as bond yields fell, traders said.
A senior Malaysian bank trader in Kulala Lumpur expected the
ringgit to rebound further against the dollar. " It will go to
3.22," said the trader. " The market is a bit long (dollar)
still, uncomfortably long," he added.
The ringgit lost 2.7 percent against the dollar in July on
bond outflows and as Fitch Ratings cut France's sovereign
outlook to negative.
The currency's July loss was the largest monthly decline
since May 2012, according to Thomson Reuters data.
Latest central bank data for June showed foreign holdings
were worth 144.5 billion ringgit ($44.54 billion) in May but
they slipped to 137.88 billion in June.

WON
The won rose on exporter demand for settlements and as
investors cut dollar positions.
But some offshore funds and domestic speculators bought the
greenback below 1,120 before U.S. jobs data, limiting the won's
upside.
South Korean exports grew far less than expected in July and
a measure of manufacturing activity slumped to the worst in
nearly a year, data showed earlier.
" There were some dollar bids below 1,120 as people want to
confirm U.S. jobs figures. So, the won will move around that
level," said a South Korean bank trader in Seoul.

RUPIAH
The rupiah eased 0.1 percent to 10,285 per dollar, the
weakest since June 2009.
Indonesia's consumer prices in July rose 8.61 percent from a
year earlier, the fastest pace in 4-1/2 years and much higher
than the 7.99 percent rise forecast, government data showed.

The trade deficit also widened to $850 million in June with
exports down 4.54 percent.
" I am still bullish on dollar/dupiah," said a Jakarta-based
currency trader, citing those economic data. The trader expected
the rupiah to weaken to 10,400 by the end of August.
The central bank may raise its overnight deposit facility
rate, FASBI, to support the ailing unit, the trader added.
Earlier on Thursday, the rupiah was already under pressure
on dollar demand from local companies such as importers before
the holidays, and the central bank was spotted providing dollar
liquidity around the session low to support the rupiah, traders
said.
Financial markets in Indonesia will be closed for the next
week to mark the end of Ramadan.


TAIWAN DOLLAR
The Taiwan dollar strengthened from Wednesday's close at
30.120, which the central bank weakened through intervention.
In the prior session, the monetary authority pushed down the
Taiwan dollar by as much as 0.1 percent against the U.S. dollar,
erasing the island's currency gains in July, traders said.
On Thursday, the Taiwan dollar found support in thin trading
as the Fed gave no fresh indication on tapering.
Investors hesitated to make big bets either way on caution
before the U.S. July non-farm payrolls.

CURRENCIES VS U.S. DOLLAR
Change on the day at 0506 GMT
Currency Latest bid Previous day Pct Move
Japan yen 98.30 97.91 -0.40
Sing dlr 1.2711 1.2710 -0.01
Taiwan dlr 29.975 30.120 +0.48
Korean won 1121.00 1123.50 +0.22
Baht 31.30 31.30 +0.00
Peso 43.46 43.42 -0.09
Rupiah 10280.00 10270.00 -0.10
Rupee 60.66 60.40 -0.43
Ringgit 3.2375 3.2440 +0.20
Yuan 6.1263 6.1289 +0.04

Change so far in 2013
Currency Latest bid End prev year Pct Move
Japan yen 98.30 86.79 -11.71
Sing dlr 1.2711 1.2219 -3.87
Taiwan dlr 29.975 29.136 -2.80
Korean won 1121.00 1070.60 -4.50
Baht 31.30 30.61 -2.20
Peso 43.46 41.05 -5.55
Rupiah 10280.00 9630.00 -6.32
Rupee 60.66 54.99 -9.35
Ringgit 3.2375 3.0580 -5.54
Yuan 6.1263 6.2303 +1.70
($1 = 3.2440 Malaysian ringgits)

(Additional reporting by Yena Park in Seoul and Miaojung Lin in
Taipei Editing by Eric Meijer)

* Spot gold reverses earlier gains, Comex gold up 1 pct
* Fed provides no guidance on tapering timeline
* U.S. GDP, jobs data stronger than expected

(Adds comments, updates prices)
By A. Ananthalakshmi
SINGAPORE, Aug 1 (Reuters) - Gold reversed early gains on
Thursday as the dollar crept off six-week lows on brighter U.S.
economic data and investors fretted about a pull-back in
monetary stimulus despite dovish comments from the Federal
Reserve.
The Fed gave no indication after a two-day policy meeting of
an imminent end to its bond buying programme, which has
supported the metal's safe haven appeal, but traders said policy
makers would closely watch upcoming data.
" I think people might be hard pressed to come up with really
a compelling reason to put new positions on gold based on that
one statement," said one Hong Kong-based precious metals trader.
" If we see a very strong recovery in the employment
situation, that will unsettle the markets," he added.
U.S. nonfarm payrolls data is due for release on Friday,
and will follow Wednesday's gross domestic product and jobs data
that painted a brighter picture of economic growth.

Spot gold fell 0.2 percent to $1,320.54 an ounce by
0354 GMT, after rising more than 7 percent in July to post its
strongest month since January 2012. Silver fell 1
percent, while platinum and palladium were higher.
U.S. gold gained as much as 1 percent.
The dollar index gained 0.5 percent, though it was
still near six-week lows.
Physical demand for bullion also remained quiet. Shanghai
gold futures turned negative after gaining at the open,
indicating soft buying in China - the world's second biggest
bullion consumer.
In top buyer India, gold imports have come to a halt due to
uncertainty in import policy, keeping premiums high at around
$45 an ounce over London prices.
The Indian central bank has still not issued any
clarification to importing agencies regarding a rule that ties
imports to exports, a Mumbai-based dealer said.
Logistics firms have not cleared a single shipment since the
rule was announced on July 22, the dealer said.

Precious metals prices 0354 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1320.54 -1.95 -0.15 -21.14
Spot Silver 19.62 -0.18 -0.91 -35.20
Spot Platinum 1435.24 1.24 +0.09 -6.50
Spot Palladium 727.75 1.75 +0.24 5.17
COMEX GOLD AUG3 1321.50 9.10 +0.69 -21.14 75
COMEX SILVER SEP3 19.60 -0.03 -0.14 -35.33 3685
Euro/Dollar 1.3274
Dollar/Yen 98.31

COMEX gold and silver contracts show the most active months

(Reporting by A. Ananthalakshmi Editing by Richard Pullin)

LONDON, Aug 1 (Reuters) - European stock index futures pointed to a higher open on Thursday, lifted by the prospect of further monetary stimulus in the United States and signs of a slight pick-up in China's factory sector.

  At 0601 GMT, futures for the Euro STOXX 50 and Germany's DAX were up 0.7-0.8 percent, while contracts on France's CAC and Britain's FTSE 100 added 0.2-0.3 percent.

* China official PMI report triggers short-covering
* Market cautious as earnings in full swing, U.S. jobs data
awaited - analyst

By Ayai Tomisawa
TOKYO, Aug 1 (Reuters) - Japan's Nikkei share average rose
in choppy trade on Thursday morning as investors zoomed in on a
better-than-expected Chinese manufacturing report, while a
handful of positive earnings also helped support the market.
China's official purchasing managers' index (PMI) rose to
50.3 in July from June's 50.1, and was stronger than market
expectations in a Reuters poll of 49.9, easing some concerns of
a sharp slowdown in Asia's biggest economy.
With markets bracing for a downside surprise, the increase
in the PMI came as a relief to investors even as the private
HSBC PMI, which was released after the official figure, showed
activity shrank for a third straight month in July to its lowest
level in nearly a year as new orders fell.
China is Japan's second-biggest export market.
" Most of us had expected that the data would be bad, so the
better-than-expected official figure forced pessimistic
investors to cover their short positions," said Takatoshi
Itoshima, chief portfolio manager at Commons Asset Management.
The Nikkei gained 1.2 percent to 13,827.43 at the midday
break after briefly trading in negative territory earlier.
The better-than-expected China's official PMI report
increased investors' appetite in companies reporting strong
earnings, analysts added.
Panasonic Corp soared 5.1 percent after it said its
operating profit jumped by two-thirds for the April-June
quarter.
Mizuho Financial Group Inc rose 2.0 percent after
reporting a 35 percent rise in net profit.
Still, the rally may be short-lived as investors remain
focused on a further batch of corporate earnings and macro
events such as Friday's U.S. jobs data, analysts said.
" Now is not the time to be taking a risk proactively," said
Hiromichi Tamura, chief strategist at Nomura Securities.
Despite the positive earnings, investors were also having to
contend with some disappointments.
Shares in Toshiba Corp dropped 5.7 percent and was
the fifth most traded stock by turnover after its quarterly
profit was hit by losses in its consumer electronics business
and fell short of forecasts.
Asahi Glass tumbled 8.4 percent after the company
cut its outlook for the year through December as well as its
dividend payout outlook.
Companies including Sony Corp, Sharp Corp
and Suzuki Motor Corp are also set to report
first-quarter results later on Thursday.
In the short-term, support for the Nikkei is seen at 13,630,
a 50 percent retracement of its rise from a low in June 13 to a
high on July 18, the lowest and highest closing levels since May
23, respectively.
Markets are also watching out for the direction of U.S.
monetary policy after the Federal Reserve on Wednesday refrained
from providing any indication that its stimulus might be scaled
back soon.
" The Nikkei's correction phase (after hitting peak on May
23) is still continuing as gains are capped by both domestic and
overseas factors," said Yutaka Yoshino, chief technical analyst
at SMBC Nikko Securities. " But within another two-to-three month
time frame, the Nikkei will likely show a steady rise as there
will be some more clarity on the Fed's tapering plan and Japan's
full-year earnings."
The Topix gained 1.5 percent to 1,149.05.
The Fed's commitment to easy money should support global
riskier assets although traders are likely to continue
speculating about the timing of the stimulus reduction which has
roiled markets in recent months.
The benchmark Nikkei has fallen about 14 percent since that
mulityear high on May 23, but is still up 31 percent this year.

 

* Fed statement offers no hint of stimulus pullback

  * S& P 500 comes close to breaking above 1,700, then slips

  * Dow sets record intraday high of 15,634.32 dips at close

  * Facebook falls after trading above IPO price of $38

  * Dow off 0.1 pct S& P 500 off 0.01 pct Nasdaq up 0.3 pct

  By Caroline Valetkevitch

  NEW YORK, July 31 (Reuters) - The S& P 500 finished a volatile session nearly flat on Wednesday as the Federal Reserve gave no hint that a reduction in the pace of its bond-buying program is imminent.

  The benchmark index pulled back just before the close after rising within 2 points of 1,700, a key resistance level that the S& P 500 has struggled to break.

  All three major U.S. stock indexes posted sharp gains for July, however, with the S& P 500's 5 percent increase its best monthly percentage gain since January.

  In a statement following its two-day policy meeting, the Fed said the economy continues to recover but still needs support. The central bank said it would keep buying $85 billion per month in Treasury and mortgage securities in an effort to strengthen the economy.

  Most growth-oriented sector indexes finished the session higher, with the S& P consumer discretionary index up 0.5 percent.

  At the same time, dividend-paying stocks such as utilities slipped. The S& P utility index slid 0.7 percent.

  " The statement was clearly more well received than the last. The Fed continues to try to talk down the concerns of kind of a premature taper," said Burt White, chief investment officer of LPL Financial in Boston.

  The Fed's stimulus has been credited by many as central to the S& P 500's gain of 18.2 percent so far this year.

  Fed Chairman Ben Bernanke jolted markets in late May by saying the central bank planned to ease back on its stimulus efforts once the economy improves. Many economists expect the Fed to reduce its bond-buying pace in September.

  Late in the session, shares of J.C. Penney sank 10.2 percent to $14.60 after commercial lender CIT Group stopped supporting deliveries from smaller manufacturers to the department store chain, according to a New York Post report. The stock was the S& P 500's biggest percentage loser.

  The Dow Jones industrial average slipped 21.05 points, or 0.14 percent, to end at 15,499.54. The Standard & Poor's 500 Index dipped 0.23 of a point, or 0.01 percent, to finish at 1,685.73.

  In contrast, the Nasdaq Composite Index rose 9.90 points, or 0.27 percent, to close at 3,626.37.

  For the month of July, the Dow rose 4 percent, the S& P 500 climbed 5 percent and the Nasdaq gained 6.6 percent.

  Stocks opened modestly higher on Wednesday after data showed the U.S. economy gained momentum in the second quarter and private-sector employers added more jobs than expected. Gross domestic product grew at an annualized rate of 1.7 percent in the second quarter, exceeding the forecast for growth at a 1 percent pace. Payrolls processor ADP reported that private-sector employers added 200,000 jobs in July - an encouraging sign ahead of the U.S. Labor Department's release on Friday of the nonfarm payrolls data for July.

  The Dow set an all-time intraday high of 15,634.32 at about 10:38 a.m., a Thomson Reuters chart showed.

  Both the S& P 500 and the Nasdaq reached their session highs shortly before 3 p.m. The S& P 500 climbed as high as 1,698.43 in the wake of the Fed's statement, while the Nasdaq reached a session high of 3,649.35, its highest since late 2000.

  It was the 10th straight session where the S& P 500 traded within 10 points of the 1,700 level. A rise above that level could signal that stocks have more room to rise.

  The late-day pullback was " technicals more than anything else," said Uri Landesman, president of Platinum Partners in New York.

  After the bell, shares of Whole Foods declined 1.6 percent to $54.68 following the release of its quarterly results.

  In Wednesday's session, the shares of credit card companies ranked among the biggest losers. Shares of Visa dropped 7.5 percent to $177.01 and had the biggest negative impact on the S& P 500. Shares of American Express, a Dow component, slid 1.9 percent to $73.77.

  In another milestone set earlier in the session, Facebook Inc's stock traded above its initial public offering price of $38 for the first time since its market debut in May 2012. The stock rose as high as $38.31. Facebook closed at $36.80, down 2.2 percent.

  Comcast Corp gave the S& P 500 its biggest boost after the U.S. cable provider posted a higher quarterly profit on Wednesday, as it added more Internet customers than expected on the cable side and booked an increase of more than 20 percent in operating cash flow at its NBC Universal unit. Comcast's Class A stock rose 5.6 percent to close at $45.08.

  Shares of Herbalife shot up 9.1 percent to $65.50 after a source said billionaire George Soros has taken a large long position in the nutritional supplement company. Herbalife's stock jumped as high as $66.25 on the report, its highest price since May 2012.

  Volume was roughly 7 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, above the average daily closing volume of about 6.4 billion this year.

  Advancers beat decliners on the NYSE by a ratio of about 15 to 14. On the Nasdaq, about 13 stocks rose for every 11 that fell.

By David Sheppard and Susan Thomas

  NEW YORK/LONDON, Aug 1 (Reuters) - Goldman Sachs' effort to diffuse intensifying pressure over its commodity business by throwing open its metal warehouse doors likely comes too late to head off further scrutiny of Wall Street's commodity trade.

  Two weeks of escalating criticism of banks that own commodity assets and trade raw materials has shaken executives and the industry, with little sign of the pressure relenting. Britain's financial watchdog is considering its own investigation of metals warehouses, sources said, and two lawmakers questioned whether power regulators were tough enough.

  Years of growing frustration over long waiting times and rising prices at metals warehouses across the world spilled into Washington this month, with lawmakers questioning why financial banks are so deeply involved in commercial activity and metal users including American brewer MillerCoors calling for a clamp-down.

  In its first major effort to appease consumers, Goldman offered on Wednesday to immediately swap aluminum for any end-users holding metal at its Metro International warehouses, allowing them to avoid year-long waits and high premiums. It also refuted the notion that it was causing a shortage of metal, saying none of its customers had yet taken up the offer.

  But the effort met with a skeptical response among some traders who said the bank had failed to address the big financial incentives paid by warehouses to attract metal into their facilities, which critics say have stoked prices.

  They also took issue with the bank's decision to limit the offer to end-users, excluding the hedge funds and other traders who are believed to account for most of the stockpiled metal.

  " It sounds to me like they're offering ice in the winter," said U.S. anti-trust lawyer Robert Bernstein, a partner at New York-based Eaton & Van Winkle LLP, who works on behalf of U.S. copper fabricators.

  The move is the latest effort by Wall Street's biggest banks to fend off a barrage of criticism of their role in the raw materials supply chain, where they do everything from stockpiling metal for clients to shipping gasoline to New York.

  Last week JPMorgan Chase & Co said it was getting out of the physical commodity business, quitting a sector it paid billions of dollars over five years to build.

  But Goldman's Chief Operating Officer Gary Cohn defended the bank's role in commodities and J Aron, its commodities trading arm, calling it a " core" business.

  " Commodity hedging is a core competence and one of the most important things we do in the firm and our clients really need us to be in that business," Cohn, who once ran J Aron, said on CNBC. " We are staying in the commodity hedging business."

  It is unclear whether the measures will ease pressure from Washington, where a handful of lawmakers are pressing regulators including the Federal Reserve and the Commodity Futures Trading Commission (CFTC) to bring banks to account.

  DOUBTS

  Goldman's move will intensify scrutiny of other merchants and banks, including Glencore Xstrata and JPMorgan Chase & Co that have bought warehouses in the past three years, and also the London Metals Exchange itself, which is in the midst of its third effort to resolve the issue.

  The lengthy waits to receive metal shipments are " a systemic problem which goes broader than Metro International," said American Beverage Association spokesman Christopher Gindlesperger.

  In London, the Financial Conduct Authority (FCA) is weighing whether to launch a probe of the London Metal Exchange (LME) warehousing system, an about-face from the past few years when the agency said it did not have authority to delve beyond derivative markets into the physical trade.

  In practice industrial clients needing metal sometimes have to queue for up to a year while warehouse companies - increasingly owned by banks or trading houses - benefit from rents they charge during the wait or traders focus on using metal in finance deals rather than providing it to clients.

  One source at a competing warehousing company was critical of Goldman's offer: " If they had said we're going to deliver out faster, that would be a different story."

  WHEN SEPTEMBER COMES

  While the commotion over commodities trade has focused most intensely on the warehousing issue, lawmakers are also looking more broadly at whether banks should be allowed in the commercial business of crude oil cargoes and power plants.

  While welcoming Goldman's effort as " great news" , Democrat CFTC commissioner Bart Chilton said the " the larger issue of banks owning physical commodities, warehousing and delivery mechanisms" remained unresolved.

  After two weeks of increasingly frenetic activity and vocal debate, many industry officials expect the din to subside during August, typically a slow month for the markets and also a five-week hiatus for legislators in Washington.

  But it may again reach fever pitch in September, with Senator Sherrod Brown expected to call Federal Reserve and bank officials to another hearing of the powerful banking committee.

  That month also marks the end of a five-year grace period granted to Goldman Sachs and Morgan Stanley to comply with commercial banking regulations after they gave up their independence at the height of the financial crisis.

  While Goldman has already sold its power plants and trades little physical oil, Morgan Stanley faces an unknown outcome for its massive global oil business, its 49 percent share in oil tanker firm Heidmar and its cherished U.S. logistics and pipelines business TransMontaigne.

  Although the banks say they should be allowed to trade and invest in commodity businesses more broadly than their rivals because of an exemption granted to investment banks in a 1999 law, it is unclear how much the Fed will allow.

  The Fed announced earlier this month that it was " reviewing" the landmark 2003 decision that first allowed banks to trade physical commodities, a shock decision that raised the specter of even deeper restrictions than banks had been bracing for. It is unclear when that review may conclude.

  " The banks went a little bit too far with the Fed's authorization to get into the commercial side of commodities business and I think that the Senate is more than shocked about what they saw when they started investigating into this situation," said Richard Bove, a veteran banking analyst currently working as an equity research analyst for Garden City, New York-based Rafferty Capital Markets LLC.

  " I doubt that any bank will have any, if you will, commercial commodities business in 12 to 18 months from now."

  OPENING THE DOOR

  Separately on Wednesday, two Democratic senators questioned whether a landmark $410 million settlement with JPMorgan earlier this week over alleged power market manipulation had included " adequate refunds to defrauded ratepayers."

  The penalty is the second-largest ever by the Federal Energy Regulatory Commission (FERC), but is " equal to roughly 1.3 percent of JPMorgan's 2012 profits" , Senators Elizabeth Warren and Edward Markey, both of Massachusetts, wrote to the FERC chairman. They also questioned why JPMorgan executives were not punished.

  The crack-down is opening opportunities for less-restricted competitors, particularly foreign banks not overseen by the Fed, potentially leading to the biggest reshuffling of market power since the 1990s era of the " Wall Street refiners."

  Brazil's Grupo BTG Pactual SA, the privately held bank run by billionaire AndrĂ© Esteves, is forging ahead with a $300 million-plus expansion plan to create a global powerhouse.

  Just months after hiring former Noble Group Chief Executive Ricardo Leiman to lead the drive, BTG has recruited nearly a dozen traders, managers and analysts in London, Geneva and New York to cover everything from freight to grains to natural gas, according to headhunters and a source familiar with the plans.

  " From a regulatory perspective they may try to become like Macquarie, a representative of a foreign bank," said Peter Henry, senior consultant at Commodity Search Partners in New York. " There's an angle there."

SINGAPORE, Aug 1 (Reuters) - U.S. crude futures edged higher on Thursday, extending the prior session's nearly 2 percent jump, after the Federal Reserve gave no indication of when it will curb economic stimulus, assuring commodity markets of continued liquidity flow for now.

  Investor focus turns to China's official manufacturing data due out at 0100 GMT, with the Purchasing Managers' Index seen showing manufacturing activity contracting for the first time in 10 months.

  FUNDAMENTALS

  * U.S. crude for September delivery gained 27 cents to $105.30 a barrel by 0040 GMT. The contract rose almost $2 on Wednesday and ended July up nearly 9 percent in its biggest monthly gain since August 2012.

  * Brent crude added 19 cents to $107.89 a barrel. It gained 5.4 percent in July, also its best monthly showing since last August.

  * While the U.S. economy continues to recover, the Fed deems it is still in need of support, suggesting it may not cut its monthly $85-billion bond purchases at its next meeting in September.

  * The U.S. economy expanded at a faster-than-expected 1.7 percent in the second quarter although first-quarter growth was revised down to 1.1 percent from 1.8 percent.

  * China will meet its economic growth target of 7.5 percent this year as authorities will continue to implement prudent monetary policy and keep market liquidity relatively ample, the chief of the top economic planning agency said.

  * U.S. private employers added 200,000 jobs in July, maintaining June's pace, and offering hope the government's comprehensive employment report on Friday could show a recent run of fairly strong job gains extended to July.

  * U.S. commercial crude stockpiles rose a tad last week after four straight weeks of declines, although oil inventories at the Cushing, Oklahoma, delivery point fell for a fifth consecutive week to the lowest since April 2012.

  * OPEC crude output hit a four-month low in July as unrest and conflict in Libya and Iraq disrupted supplies, according to a Reuters survey, a further unplanned cutback bringing supply closer to the organization's target.

  MARKETS NEWS

  * The U.S. dollar wallowed at six-week lows against a basket of major currencies, having slipped overnight after the Federal Reserve gave no fresh hint that it was preparing to scale back stimulus at its next meeting in September.

  DATA/EVENTS (GMT)

  0100 China Official manufacturing PMI

  0145 China HSBC manufacturing PMI final

  0500 India HSBC Markit manufacturing PMI

  0743 Italy Markit/ADACI manufacturing PMI

  0753 Germany Markit/BME manufacturing PMI

  0758 Euro zone Markit manufacturing PMI

  1145 European Central Bank policy decision

  1230 ECB President Mario Draghi holds news conference

  1230 U.S. Weekly jobless claims

  1400 U.S. ISM manufacturing PMI

  1400 U.S. Construction spending

  (Reporting by Manolo Serapio Jr. Editing by Richard Pullin)

SINGAPORE, Aug 1 (Reuters) - Gold edged higher on Thursday
after the Federal Reserve said it would continue to support the
U.S. economy by buying back bonds, even as U.S. economic growth
and jobs data painted a brighter outlook.
U.S. gold futures rose more than 1 percent, pushing
up prices of other precious metals.

FUNDAMENTALS
* Spot gold rose 0.4 percent to $1,328.31 an ounce by
0016 GMT, after posting its strongest month since January 2012.
* U.S. gold gained 1 percent to $1,327.40, while
silver futures also rose 1 percent.
* The Fed on Wednesday said it would keep buying $85 billion
in mortgage and Treasury securities per month in an effort to
strengthen an economy that it said was still challenged by
federal budget-tightening. It did not give an indication on when
it would start tapering.
* A government report on Wednesday showed the U.S. economy
expanded at a faster-than-expected 1.7 percent annual rate in
the second quarter. The ADP National Employment Report showed
private employers added 200,000 jobs in July, maintaining June's
pace.
* The amount of gold transferred between accounts held by
bullion clearers rose to a 12-year high in June for a second
month, at an average of 29.0 million ounces a day, data from
industry group the London Bullion Market Association showed.

* The price of gold has room to increase even if U.S.
interest rates keep rising as an improving economy should boost
demand by jewellers and manufacturers, a report by the World
Gold Council trade group said on Wednesday.
* Sales of American Eagle gold bullion coins climbed 66
percent in July on a year-on-year basis, as retail investors
snap up physical gold products, data on the U.S. Mint's website
showed on Wednesday.
* Gold importers in India, the world's biggest buyer of the
metal, are refraining from fresh shipments on uncertainty in
import policy, supporting premiums even as prices hit their
highest level in more than three-and-a-half months.
* For the top stories on metals and other news, click
, or

MARKET NEWS
* The U.S. dollar wallowed at six-week lows against a basket
of major currencies on Thursday, having slipped overnight after
the Fed gave no fresh hint that it was preparing to scale back
stimulus at its next meeting in September.

DATA/EVENTS (GMT)
0100 China Official manufacturing PMI
0145 China HSBC manufacturing PMI final
0500 India HSBC Markit manufacturing PMI
0743 Italy Markit/ADACI manufacturing PMI
0753 Germany Markit/BME manufacturing PMI
0758 Euro zone Markit manufacturing PMI
1145 European Central Bank policy decision
1230 ECB President Mario Draghi holds news conference
1230 U.S. Weekly jobless claims
1400 U.S. ISM manufacturing PMI
1400 U.S. Construction spending

Precious metals prices 0016 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1328.31 5.82 +0.44 -20.68
Spot Silver 19.85 0.05 +0.25 -34.45
Spot Platinum 1436.49 2.49 +0.17 -6.42
Spot Palladium 726.47 0.47 +0.06 4.98
COMEX GOLD AUG3 1327.40 15.00 +1.14 -20.79 20
COMEX SILVER SEP3 19.82 0.19 +0.98 -34.60 623
Euro/Dollar 1.3303
Dollar/Yen 97.73

COMEX gold and silver contracts show the most active months

(Reporting by A. Ananthalakshmi Editing by Richard Pullin)

* FTSE 100 closed up 50.11 points at 6,621.06

  * U.S. GDP accelerates to revive flat lining FTSE

  * Heavyweight banks and energy stocks lead charge

  * Investors toast Diageo as profits rise (updates closing prices)

  By David Brett

  LONDON, July 31 (Reuters) - The FTSE 100 rallied on Wednesday as the quickening pace of the global economy's heartbeat revived confidence that economic recovery can be sustained even if stimulus is withdrawn.

  Economic growth in the world's largest economy, the U.S., unexpectedly accelerated in the second quarter, with gross domestic product growing at a 1.7 percent annual rate, stepping up from the first-quarter's downwardly revised 1.1 percent expansion pace.

  " It is not a barn-storming reading by any stretch of the imagination, but shows further momentum in the world's biggest economy," Marcus Bullus, trading director at MB Capital, said.

  " However GDP is measured, such a strong number sent an instant buy signal to the markets," he said.

  Heavyweight stocks led the charge on London's blue chip index, which closed up 50.11 points or 0.8 percent at 6,621.06, although off the session high of 6,65.35 with the Federal Reserve's post-policy meeting announcement due late on Wednesday, which could derail the rally.

  " I am now selling on the bounces," Ed Woolfitt, head of trading at Galvan, said. " Technically, it feels a correction is brewing up."

  Europe's biggest bank HSBC added 8.5 points to the index with traders citing a switch out of more UK-focused banks following Barclays' six billion pounds cash call on Tuesday.

  Energy shares, which are acutely exposed to the fortunes of the broader economy, contributed 10.6 points to the index's gains, with oil major BP up 0.7 percent boosted by upbeat comment from BofA Merrill Lynch and JP Morgan post results.

  Although the economic recovery in Europe and the UK is still lagging, there have been signs of life in the data in recent weeks, which has given some fund managers more confidence.

  " This is a theme we have been playing in portfolios since the beginning of this year adding companies which have high exposure to Europe and should benefit from any improvement in GDP growth," Andrew Arbuthnott, head of European large cap equities at Pioneer Investments, said.

  " Q2 earnings to date have been lacklustre at best but we believe the market is really looking through these numbers and expecting an improvement in quarters to come," he said.

  Although only a small sample size, 75 percent of UK-listed companies have either beaten or met expectations in the current quarter, compared with just 52 percent of European companies.

  Diageo rose 3.2 percent after posting an 8 percent rise in annual operating profit.

  Oil explorer Tullow climbed 1.1 percent after a successful drill at its Etuko-1 well in Kenya. [ID:nL6N0G11XB

  Centrica added 1.3 percent after reporting higher first half earnings. (Reporting by David Brett editing by Ron Askew)

* Investors await Fed statement for signals on stimulus plan

  * U.S. GDP growth, private sector hiring beat forecasts

  * Crude stocks at Cushing fall for 5th straight week: EIA (Recasts and adds details changes byline and dateline, previous LONDON)

  By Jeanine Prezioso

  NEW YORK, July 31 (Reuters) - The premium of Brent crude oil to U.S. crude oil futures remained steady on Wednesday, while U.S. oil prices rose on positive economic data and Brent was mostly flat as traders weighed supply dynamics.

  Positive U.S. economic data offset a government report that showed stockpiles of crude oil had risen against expectations for a draw. Crude oil supplies at the Cushing, Oklahoma, delivery point fell for a fifth straight week to the lowest level since April 2012, data from the U.S. Energy Information Administration showed.

  The build should have been bearish for the crude oil market but prices remained supported by " the positive GDP number, which implies a certain degree of future demand," said Bob Yawger, director of futures at Mizuho Securities USA.

  Front-month Brent crude oil futures were trading 13 cents higher at $107.04 per barrel at 11:47 a.m. EDT (1547 GMT), on track for their biggest monthly gain since August 2012.

  U.S. crude oil futures were last trading $1.20 per barrel higher at $104.28, headed for a 9 percent monthly rise, the biggest in 11 months.

  The front-month premium of Brent over U.S. crude oil< CL-LCO1=R> was trading at $2.74 per barrel. The next month< CL-LCO2=R> was also trading around the same at $2.73.

  The market is waiting on the U.S. Federal Reserve to release a statement at 2 p.m. EDT (1800 GMT) following a two-day policy meeting, which is expected to provide more clues on eventual plans to roll back its monetary stimulus.

  Data showed U.S. economic growth unexpectedly accelerated in the second quarter and private sector hiring was higher than forecast in July, which could lead the Fed a step closer to cutting back stimulus.

  Brent crude oil prices were set to post their biggest monthly rise in close to a year, boosted by gains earlier in July as political tensions in the Middle East kept alive concerns about oil supplies out of that region, which pumps a third of the world's oil.

  Oil outages in Iraq, South Sudan, Libya and Iran have combined to help keep Brent crude oil prices well above $100 a barrel this month, partly countering the rise in U.S. shale oil supply and worries about Chinese demand.

  But on Wednesday the market viewed global oil supplies as less of a concern as Sudan said it may not be forced to block vital crude exports from South Sudan after recent " good steps" made to end a row over alleged rebel support.

  Pumping of crude oil resumed through the Kirkuk-Ceyhan pipeline last night after repairs were completed following a bomb attack over the weekend.

  Investors were also awaiting manufacturing data later this week from China, which could highlight weakness in the world's No. 2 oil consumer.

  (Editing by David Evans, Jane Baird and Chris Reese)

* U.S. GDP better than expected, eurozone employment improves

  * Fed to release post-meeting statement at 2 p.m. EDT (1800 GMT

  * Shares set for stellar July on loose central bank policies

  * U.S dollar maintains gains going into Fed statement

  NEW YORK, July 31 (Reuters) - Stocks in the U.S. and Europe rallied along with the dollar on Wednesday after data showed the U.S. economy grew more quickly than expected in the second quarter and ahead of a Federal Reserve policy statement.

  But even amid the positive sentiment after the U.S. data, investors remained focused on potentially game-changing central bank policy decisions in the next 24 hours from the Federal Reserve, the ECB and the Bank of England.

  U.S. economic growth, as measured by gross domestic product, accelerated in the second quarter by a 1.7 percent annual rate, the government said. Economists had expected a 1.0 percent gain.

  In addition, private employers added 200,000 jobs in July, according to the ADP National Employment Report, topping economists' expectations and laying a firmer foundation for the rest of the year that could bring the Fed closer to cutting back its stimulus.

  " We have an upside surprise in the GDP, which speaks volumes for the job recovery that we're putting together," said Andre Bakhos, director of market analytics at Lek Securities in New York.

  " The recovery in the economy is starting to take root. This will be an interesting development given the fact that we'll have a Fed announcement today, and it will play into how Wall Street perceives the Fed's tapering plans."

  Halfway through the New York trading day, the Dow Jones industrial average was up 64.21 points, or 0.41 percent, at 15,584.80. The Standard & Poor's 500 Index was up 7.86 points, or 0.47 percent, at 1,693.82. The Nasdaq Composite Index was up 18.18 points, or 0.50 percent, at 3,634.65.

  Later Wedneday a Federal Reserve statement will be scoured for clues on when the U.S. central bank will curb its bond-buying stimulus program that has supported global markets.

  On Thursday, attention will switch to European Central Bank and Bank of England policy meetings and data on global manufacturing activity, followed by the U.S. employment report on Friday.

  Signs the developed world's central banks will keep monetary policy loose for a long time to support a tentative economic recovery have put many equity and commodities markets on course for their best month of the year in July.

  But strategists have also cautioned that the gains, which could cause the MSCI World Equity index to post its best monthly rise since January 2012, have increased the risk that investors could find reasons over the next few days to cash out.

  " At the least what we expect is a lot more volatility and we think the volatility comes with a bit more downside risk than upside potential," said Wouter Sturkenboom, investment strategist at Russell Investments in London.

  Any hints of imminent " tapering" of Fed bond buying could hit stocks and gold but push the U.S. dollar higher, but few expect a clear-cut signal.

  EUROPEAN STOCKS RISE

  In Europe, stock market gains were underpinned by data showing the number of people out of a job in the euro zone fell for the first time in more than two years in June.

  Europe's broad FTSEurofirst 300 index, was little changed though on track for it best month in over a year

  The dollar was up 0.3 percent against the yen and little changed against the euro. The dollar index was up 0.1 percent.

  " If there's any suggestion the Fed is going to taper the current bond buying program as soon as September, then that's U.S. dollar-positive," said Ben Le Brun, an analyst at OptionsXpress in London.

  German Bund futures hit session lows on Wednesday after the U.S. data. Bund futures fell as low as 141.82.

  The benchmark 10-year Treasury note lost 19/32, pushing its yield to 2.677 percent.

  CHINA FEARS

  Earlier in Asian trading, MSCI's Asia-Pacific ex-Japan share index slipped 0.6 percent, taking its losses so far this year to 5 percent as the region's markets suffer from fears that China's giant economy is slowing rapidly.

  A reading on manufacturing activity in the world's second-largest economy due on Thursday is expected to add to those fears by showing a contraction in July for the first time in 10 months, according to a Reuters poll.

  A recent run of weak Chinese data, which prompted a pledge from Beijing on Wednesday to keep growth stable in the second half of 2013, has also undermined commodities.

  Gold fell 1.5 percent. But it is still up 6 percent so far this month, on track to snap a three-month losing run and mark its biggest monthly rise since January 2012, though it is down 20 percent since the beginning of 2013.

  U.S. crude rose 1.1 percent to change hands at $104.19 a barrel ahead of the Fed statement.

* Dollar steady in Asian trade, market awaits Fed

  * Asian shares ease, Chinese stocks up

  * Fed to release post-meeting statement at 1800 GMT

  * Gold heads for best monthly rise since Jan. 2012

  By Dominic Lau

  TOKYO, July 31 (Reuters) - Chinese shares rose after Beijing pledged to keep economic growth stable in the second half of the year, while the dollar held onto slight gains as market momentum stalled ahead of the outcome of the U.S. Federal Reserve policy meeting on Wednesday.

  European shares were expected to open steady, with London's FTSE 100 seen up as much as 0.1 percent and Frankfurt's DAX indicated flat, while U.S. S& P 500 index futures edged up 0.1 percent.

  The dollar was steady against a basket of major currencies after a 0.2 percent rise on Tuesday. The dollar index is down 1.5 percent in July and set to post a second straight monthly loss for the first time since the turn of the year.

  The dollar index hit a five-week trough earlier this week as investors bet the Fed would reassure markets that interest rates would remain low for a long time even if it started scaling back stimulus this year.

  The Fed will release its post-meeting statement at 1800 GMT, but there will be no news conference by Chairman Ben Bernanke.

  " Traders globally seem to be in a wait-and-see mode before the outcome of the Fed's meeting on the timing of quantitative easing tapering," said Mitsushige Akino, chief fund manager at Ichiyoshi Asset Management in Tokyo.

  The Fed is expected to link the start of any tapering to data signals, and markets get two major reports this week to their cues.

  U.S. second quarter GDP data on Wednesday is expected to show growth slowed to an annualised pace of 1.0 percent in the second quarter from 1.8 percent in the first, while payrolls data on Friday is forecast to show a fall in the jobless rate.

  The European Central Bank and the Bank of England meet on Thursday, and are set to hold policy steady.

  The yen added 0.1 percent to 97.910 yen to the dollar, while the euro was steady at $1.32560 after hitting a six-week high of $1.33025 on Tuesday.

  CHINESE SHARES UP

  China's CSI300 index rose 0.5 percent after authorities pledged to keep growth stable in the second half of 2012 while pressing ahead with reforms and restructuring. The index is still down nearly 13 percent this year.

  " The statement made by the Politburo is quite favourable for the property sector," said Cao Xuefeng, a Chengdu-based head of research at Huaxi Securities.

  Asian shares as measured by the MSCI Asia-Pacific ex-Japan index slipped 0.4 percent. The index is up 2.1 percent so far this month, on track to end a two-month losing run, though it is still down 5 percent so far this year.

  Japan's Nikkei share average dropped 1.5 percent in light trading, giving up some of the previous session's 1.5 percent gain. Still, the benchmark is up 31.5 percent in 2013, underpinned by the government's aggressive stimulus policies aimed at reviving the world's third-largest economy.

  Of the 54 Nikkei companies that have reported quarterly earnings so far, two-thirds either beat or met market expectations, according to Thomson Reuters StarMine, versus 54 percent in the previous quarter.

  But in a sign that companies are curbing production due to slowing growth in exports, Japanese manufacturing activity in July grew at the slowest pace in four months.

  COPPER REBOUNDS

  In commodity markets, copper prices climbed 1 percent to just above $6,800 a tonne, rebounding from near three-week lows after dropping 2.1 percent on Tuesday on concerns about demand in top consumer China.

  A Reuters poll found Chinese manufacturing activity may have contracted in July for the first time in 10 months, signalling a protracted slowdown in the world's second-largest economy. The PMI will be released on Thursday.

  Gold gained 0.5 percent. It is up 8.2 percent so far this month, on track to snap a three-month losing run and mark its biggest monthly rise since January 2012, but it is down 20 percent since the beginning of 2013.

  Brent crude prices eased 0.2 percent to around $106.70 a barrel, extending a 0.6 percent decline on Tuesday. They are up 4.5 percent this month, heading for their best monthly gain since August last year.