* China's factories expand at best pace in seven months
* U.S. Treasuries yields near three-month lows as Fed taper seen next year
* Wall St up as mixed earnings offset by China data, Fed hopes
NEW YORK, Oct 24 (Reuters) - Global equity markets resumed their recent upward trend on Thursday, boosted by signs of growth in Chinese manufacturing, while the euro rose to a fresh two-year peak against the dollar.
On Wall Street, the S&P 500 index was on track for its tenth gain in the past 12 sessions as expectations for steady accommodative monetary policy for the foreseeable future offset a mixed batch of earnings and economic data. The benchmark index closed at a record on Tuesday.
Boosting investors' appetite for risky assets was data showing growth in China's vast factory sector reached a seven-month high this month, easing concerns about a slowdown in Chinese exports, which would point to weakening global demand.
In the United States, initial claims for state unemployment benefits fell less than expected in the latest week. The preliminary read of Markit's Manufacturing Purchasing Managers Index grew at its slowest pace in a year this month and factory output contracted for the first time since late 2009.
The euro was up 0.2 percent at $1.3802, having hit $1.3824, its strongest since November 2011, while the dollar fell broadly, hitting a near nine-month low against a basket of currencies of 79.081. It was last down 0.1 percent at 79.166.
U.S. Treasuries yields held near three-month lows on Thursday as expectations that the Federal Reserve is still months away from reducing the size of its $85-billion-a-month bond-purchase program kept up strong demand for the debt.
Fed policy is seen as very data-dependent, though economic indicators over the coming months are likely to be skewed by the effects of the government shutdown. That could limit insight on the state of the economy and to what degree the shutdown and the fight over raising the debt ceiling harmed growth.
"What we've been seeing since the government shutdown and debt ceiling was resolved is a desire to jump back into Treasuries," said Jason Rogan, managing director in Treasuries trading at Guggenheim Partners in New York.
"Most market participants are of the mind that the Fed is on hold for the foreseeable future."
Benchmark 10-year Treasuries were last was down 7/32 in price to yield at 2.5106 percent, near the three-month lows of 2.47 percent set on Wednesday.
On Wall Street, the Dow Jones industrial average was up 93.07 points, or 0.60 percent, at 15,506.40. The Standard & Poor's 500 Index was up 6.02 points, or 0.34 percent, at 1,752.40. The Nasdaq Composite Index was up 24.80 points, or 0.63 percent, at 3,931.88.
European shares recovered their poise, climbing back toward five-year highs on strong corporate results and the encouraging manufacturing data from top metals consumer China.
The pan-European FTSEurofirst 300 index rose 0.5 percent to 1,285.89, recovering from the previous session's fall and climbing back toward Tuesday's five-year highs of 1,291.93.
MSCI's world equity index added 0.3 percent, slightly retracing losses of 0.6 percent on Wednesday, when markets were rocked by fears that a spike in Chinese short-term rates could hurt growth.
U.S. corporate earnings continue to pour in, with 47 S&P 500 components expected to report on Thursday, including Microsoft Corp and Amazon.com Inc after the close of trading.
So far, the prospect of continuing easy money was enough to offset an earnings season marked by some weak outlooks and tepid revenue growth. Shares of Dow Chemical Co, Xerox Corp and AT&T Inc all fell following results on Wednesday, though Ford Motor Co was a bright spot.
"Earnings haven't been a best-case or worst-case scenario, but it doesn't look like the economy is firing on all cylinders," said John Norris, managing director of wealth management with Oakworth Capital Bank in Birmingham, Alabama.
"Still, while the gains we've seen might be illusory, given the Fed, there's no reason to think we're on the cusp of a pullback so long as the Fed stays put."
In commodities trading, spot gold rose as much as 1.2 percent to its highest since Sept. 20 at $1,348.24 an ounce, as the outlook for an unchanged Fed policy heightened concerns about inflation risk.
Brent crude futures slipped as rising supplies of crude oil in the United States drove prices toward a two-month low, while U.S. crude fell for a fourth straight session, to its lowest since June. But the selling was not as heavy as in the previous session.
Brent crude oil was down 71 cents to $107.09 a barrel while the U.S. crude oil benchmark, West Texas Intermediate or WTI, edged up 13 cents to $96.99.
Copper fell to its lowest in more than a week as concerns about tight credit in China and its impact on demand offset the brighter growth outlook.