GLOBAL MARKETS-Dollar slides ahead of Fed, China data hit oil
* Sterling hits 2-1/2 month high, UK shares rise after data boost
* China April PMI eases from March's 11-month high, oil falls
* Fed policy meeting ends later on Wed, ECB meets Thursday
* Most markets in Asia, Europe shut for Labour Day
By Marc Jones
LONDON, May 1 (Reuters) - The dollar edged to a two-month low on Wednesday as investors tried to assess how far recent patchy U.S. data will have raised concerns at the Federal Reserve.
Stronger-than-expected UK manufacturing figures lifted sterling and the FTSE.
The Markit/CIPS UK Manufacturing Purchasing Managers' Index (PMI) rose to 49.8 in April from an upwardly revised 48.6 in March, putting the sector within a whisker of the 50 line that separates growth from contraction.
Economists had expected a much weaker reading of 48.5 and the first rise in the new orders component of the survey since January boosted stocks and the pound.
Sterling rose to a new 2-1/2 month high against the dollar of $1.5591, UK gilts fell and London's FTSE 100, the only of Europe's major stock markets not closed for Labour Day, climbed back towards its recent 4-1/2 year high
Unlike the United States, China and the euro zone, Britain's are the only PMIs currently heading upwards though sluggish growth and high debt levels kept economists cautious even after the surprise.
"It's a relatively decent result," said Investec economist Philip Shaw. "The manufacturing sector is still weak - the PMI remains below the 50 break even level - but there is some semblance of stabilisation, which could imply a gentle building of recovery momentum across the economy."
Wider market attention remained largely on central bank actions. The Federal Reserve will announce the outcome of its latest meeting at 1800 GMT, while the European Central Bank is expected to cut its main interest rate to a record low of 0.5 percent on Thursday.
The dollar dipped to a new two-month low of 81.405 against a basket of six major currencies pending the Fed statement and as both sterling and the euro moved upwards.
U.S. stock index futures signalled that the recent rally on Wall Street, which sent the S&P 500 index to its latest record high on Tuesday, could stall though much will depend on the noises coming from the Fed.
The central bank is widely expected to maintain its monthly purchases of $85 billion in bonds as it looks to support an economic recovery that is nearly four years old but still too weak for the job market to truly heal.
Underscoring the point, April ADP jobs data before the Wall Street restart came in well below expectations, with employers adding 119,000 against forecasts for 150,000.
With the central bank's favoured inflation gauge also slipping, Fed officials could again find themselves in the uncomfortable position of having to shift from talk of curbing stimulus to the possibility of doing more.
"We think the focus of the meeting has shifted," said Rabobank economist Philip Marey. "Last time they were talking about tapering the (bond) purchases but since then the data have deteriorated so now we think they will be discussing how bad this spring slowdown will be."
The ECB is expected to cut rates when it meets in the Slovak capital Bratislava on Thursday but economists are eyeing whether it can do more.
It lacks the aggressive policies many of its major peers are now using and the mismatch in approaches, as well as the dollar's weakness, was keeping upward pressure on the euro . By 1240 GMT it was up 0.5 percent at a new 2-1/2 month high of $1.3242.
In Asia, the highlight of the session was China's official purchasing managers' index (PMI) data for April.
Growth in China's manufacturing sector unexpectedly slowed in April to 50.6 from an 11-month high of 50.9 in March as new export orders fell, raising fresh doubts about the strength of the economy after a disappointing first quarter.
Many of the region's bourses were closed for Golden Week public holidays but the disappointment from the data was evident across risk assets.
The Australian dollar, highly sensitive to data from China, Australia's biggest trading partner, hit a session low of $1.0345, oil fell back below $101 a barrel and copper dropped almost 2 percent as it slid under $7,000 a tonne again.
"If we are right, the market should further lower growth expectations (for China) and prepare for years of uncomfortable economic policy as the new leadership strives to achieve a relatively painless rebalancing," economists at Societe Generale said in a note to clients.