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GLOBAL ECONOMY-Bank of England at forefront of global rates dilemma

* Rate decisions due in UK, India, Brazil, Australia and NZ

* C.banks balance strong global growth vs soft inflation

* Services PMI, German factories, Chinese trade see upswing

* New Fed Chairman Jerome Powell starts four-year term

LONDON, Feb 2 (Reuters) - The Bank of England will find itself facing a question next week that is set to trouble many other central banks this year - does an unexpectedly strong global economy mean it should press ahead with raising interest rates?

For the BoE - and its Indian, Australian and New Zealand counterparts - the answer over the next few days is likely to be no, as domestic uncertainties for now outweigh the inflationary pressure of a powerful global upswing.

But the odds of moves further away from the emergency level stimulus of the financial crisis are shortening. In government bond markets, yields on 10-year U.S., German and British debt have leapt by more than 30 basis points since the start of the year and two-year U.S. yields are their highest since 2008.

BoE Governor Mark Carney takes center stage on Thursday, when he will set out the central bank's thinking on Britain's prospects, barely a year before the country is due to leave the European Union.

No economist thinks a BoE rate hike is coming next week, according to Reuters polls. But markets see a 50 percent chance that there will be another move in May, a relatively quick follow-up to the BoE rate hike in November, the first for a decade.

UBS's chief economist, Arend Kapteyn, recently changed his mind to predict a May rate rise due to recent strength in the global economy - assuming that Prime Minister Theresa May can get a temporary Brexit deal before then.

"We think the data lines up for a brief window where they can hike," he said.

Much later and there is a risk that the domestic economy may sour, as businesses hold off on investment and hiring in the months running up to Britain's departure from the EU.

Politics is also likely to exert its sway over the Reserve Bank of India's thinking next week, after an expansionary budget on Thursday which boosted rural spending and predicted that India would become the world's fastest-growing major economy.

A decision to jack up farmers' production subsidies was especially likely to intensify the RBI's worries about above-target inflation, economists said.

Going the other way is Brazil, which is likely to cut rates on Wednesday as the country slowly pulls out of more than two years of economic malaise.

SERVICES SMILE

UBS has just upgraded its global growth forecasts to pencil in expansion of 4.1 percent for this year - which would be the fastest since 2011 - after 3.9 percent growth in 2017.

More evidence of the strength of the global recovery is likely to come on Monday, with a raft of services PMIs for advanced economies.

Manufacturing data previously showed factory activity hitting multi-year highs, and an early version of the services PMI for the euro zone rose to its highest since 2006.

"The activity data at the beginning of next week should go some way to confirming that the world economy started 2018 on the right foot," HSBC economist James Pomeroy said.

Further confirmation was likely to come from Chinese trade data and German industrial orders, he added.

Overall, open economies such as Australia and New Zealand should not focus too much on current below-target inflation and prepare to raise rates in the second half of the year, he said.

"I think this is a global theme, but will be much more acute in those countries where you have financial stability concerns," he said, highlighting a rise in household debt.

For Kapteyn of UBS, the slide in the U.S. dollar - which has fallen 4 percent so far this year on a trade-weighted basis - made the case much less obvious for rate rises outside the United States because it will ease inflation pressures.

More than usual, survey data in advanced economies looked too good to be true.

"You are seeing very strong growth data, but very little price or wage pressure. The volatility in currencies is dwarfing the reduction in slack," he said.

By contrast, new Federal Reserve Chairman Jerome Powell, whose four-year term starts on Saturday, may have to raise rates more often than the three times planned for this year - especially if the U.S. Congress loosens the fiscal purse-strings.

"Dollar weakness is reducing the freedom of the Fed. They're going to become very, very sensitive to any upward surprise in growth or wage forecasts. For the rest of the world, it's largely the opposite," Kapteyn said. (Editing by Andrew Roche)