* Revived demand for Internet stocks curbs Wall Street's loss
* Oil prices fall as Chinese factory data disappoint
* U.S. bonds rally before jobs data; sterling near 5-year peak
* May Day holiday mutes trading volume in Europe, Asia
(Updates market action, adds quote) NEW YORK, May 1 (Reuters) - Wall Street stocks dipped on Thursday, despite a resurgence in Internet shares, while disappointing data on Chinese manufacturing activity knocked oil prices to a three-week low. U.S. bond prices rallied, with 30-year yields falling to their lowest level since last June, as some traders bet that U.S. payrolls data due on Friday would be weaker-than-expected, following news of surprisingly weak first-quarter U.S. growth. Gold prices lost some luster, falling as much as 1 percent earlier, after the U.S. Federal Reserve reiterated confidence on its economic outlook despite the slim 0.1 percent growth in U.S. gross domestic product in the first three months of 2014. "Internet is the place to be today," said Michael Matousek, head trader at U.S. Global Investors Inc. in San Antonio, Texas. "When you have a group that has been beaten up over the past month, along with a market that is setting new highs, that's a cue for momentum players to come back into the market." Customer-review website operator Yelp Inc. led the Internet sector a day after it reported strong revenue growth. Its results buoyed related shares which were battered recently on fears that they, along with momentum names in the biotech sector, were overvalued. Yelp ended up 8.8 percent to $63.43 with 1.9 million shares changing hands, the second-heaviest trading day since its IPO in March 2012. Revived demand for Yelp, Facebook, Netflix and other momentum stocks mitigated declines in shares of Exxon Mobil , pharmaceutical distributor Cardinal Health and aircaft maker Textron which pressured the Dow Jones Industrial average below the record close it set on Wednesday. The Dow Jones industrial average fell 22.09 points or 0.13 percent, to 16,558.75, the S&P 500 lost 0.28 points or 0.01 percent, to 1,883.67 and the Nasdaq Composite added 12.896 points or 0.31 percent, to 4,127.451. May Day holidays in Europe, much of Asia and parts of Latin America reduced trading volume. London's blue-chip FTSE index closed up 0.4 percent at its highest since early March, boosted by results from Lloyds Banking Group and TV and media group BSkyB. Upbeat earnings also spurred the biggest two-week rally in Tokyo's Nikkei which ended up 1.3 percent.
The MSCI world equity index, which tracks shares in 45 nations, edged up 0.1 percent, to 414.63.
WORRIES ABOUT CHINA Equities markets overcame a brief hiccup after China's official factory gauge rose slightly to 50.4 in April but came in below a forecast of 50.5. A reading above 50 signals expansion. Concerns about energy demand from China, the world's No. 2 economy, together with high oil inventories in the U.S., sent Brent crude below $107 a barrel before it trimmed some losses. It ended down 31 cents, or 0.29 percent, at $107.76 a barrel, while U.S. crude futures settled down $0.32, or 0.32 percent, at $99.42 per barrel. As Chinese factory growth has struggled to accelerate, Markit reported its U.K. manufacturing gauge rose to its strongest level since November, propelling the sterling to its highest against the dollar in nearly five years. The pound was $1.6890 in late New York trading. The greenback held steady against other currencies. The dollar index, which tracks the greenback versus a basket of six currencies, inched up 0.07 percent, to 79.528. The dollar was held back by lower U.S. yields as some traders scaled back bets on a relatively strong April jobs figure in the wake of the dismal GDP report, analysts said. The yield on the U.S. 30-year Treasury bond fell 5 basis points to 3.41 percent, its lowest since June. Economists polled by Reuters projected a 210,000 increase in non-farm jobs last month, up from 192,000 in March. The risk that the U.S. economy might not recover from a weak first quarter might keep the Fed from raising short-term rates before the second half of 2015 and perhaps even cause the central bank to slow its reduction of its bond purchase program. Some investors don't see this occurring. "I don't think even with a weaker-than-expected jobs figure we are going to see the Fed stop tapering," said Carsten Quitter, chief investment officer at Allianz Life Insurance of North America in Minneapolis. The Fed, as expected, said on Wednesday it will cut its monthly buying of Treasuries and mortgage bonds by another $10 billion to $45 billion. The continued wind-down of Fed stimulus led to a second day of selling in gold. Spot bullion prices fell fell $6.83 or 0.53 percent, to $1,284.46 an ounce
(Additional reporting by Ryan Vlastelica in New York, Marc Jones in London, Wayne Cole in Sydney; Editing by Leslie Adler, Bernadette Baum and Meredith Mazzilli)