GLOBAL MARKETS-Stocks, dollar gain on data; Fed statement ahead
* Caution overshadows encouraging euro zone jobless data
* Fed to release post-meeting statement at 2 p.m. EDT (1800 GMT
* Shares set for stellar July on loose central bank policies
NEW YORK, July 31 (Reuters) - Stocks and the dollar rallied on Wednesday ahead of three key central bank announcements after data showed the U.S. economy grew more quickly than expected in the second quarter.
But even amid the positive sentiment after the data, investors remained focused on the potentially game-changing central bank policy decisions in the next 24 hours. A Federal Reserve statement on Wednesday 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.
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."
A little more than an hour after the start of trading on Wall Street, the Dow Jones industrial average was up 102.02 points, or 0.66 percent, at 15,622.61. The Standard & Poor's 500 Index was up 10.48 points, or 0.62 percent, at 1,696.44. The Nasdaq Composite Index was up 21.40 points, or 0.59 percent, at 3,637.87.
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 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, on course for its best month in over a year, rose 0.4 percent.
The dollar was up 0.2 percent against the yen while the euro was little changed against the dollar. 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 20/32, pushing its yield to 2.6809 percent.
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, though U.S. crude rose 0.2 percent to change hands at $103.23 a barrel.
Gold fell 0.9 percent. But it is still up 6.6 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.