(Corrects analyst's affiliation in paragraph 4 and description of the dollar's activity on Thursday morning in paragraph 5)
* Global share indexes near all-time high
* S&P 500 hits record on growth bets despite U.S. GDP contraction
* U.S. bond yields slip to 11-month lows
By Angela Moon
NEW YORK, May 29 (Reuters) - Global equity markets hovered just off all-time highs on Thursday as investors brushed off a weaker-than-expected reading on the U.S. economy, while benchmark U.S. Treasury yields fell to 11-month lows.
On Wall Street, the S&P 500 hit another intraday high early in the session despite first-quarter GDP data showing the U.S. economy contracted 1 percent. Better-than-expected jobless claims pointing to a strengthening labor market and merger and acquisition activity also boosted sentiment.
The dollar trimmed early losses against major currencies as traders focused on signs of the U.S. economy strengthening.
"Once you get beyond the headline number and look under the hood, things don't really look so bad," said Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York. "Inventories were to blame for a lot of it and that bodes well for the future."
The dollar retraced earlier losses against the euro and British pound following the GDP report.
The MSCI World Index, which has gained 1.4 percent since the last ECB policy meeting, was up 0.9 percent.
Wall Street's Dow Jones industrial average was up 9.77 points, or 0.06 percent, at 16,642.95. The Standard & Poor's 500 Index was up 3.39 points, or 0.18 percent, at 1,913.17. The Nasdaq Composite Index was up 11.92 points, or 0.28 percent, at 4,236.99.
European shares held near multi-year highs, with the pan-European FTSEurofirst 300 index close to a near six-year peak reached earlier this week.
The euro, which had fallen around 2 percent against the dollar over the same period, consolidated just above a three-month low of $1.3584.
Yields on benchmark 10-year Treasuries last traded at 2.409 percent. The yield on 30-year bonds was 3.273 percent, an 11-1/2-month trough.
While U.S. yields have fallen on economic worries and some safe-haven demand tied to conflict in Ukraine, analysts attribute the move to technical factors, including month-end portfolio rebalancing and exiting bets on rising yields.
German bond yields held at the lowest levels in a year and on course to record a fifth consecutive month of declines on bets the European Central Bank would unveil new stimulus measures next week.
ECB policymakers have opened the door to a rate cut, effectively charging banks to hold cash at the central bank overnight, and to a refinancing operation aimed at supporting businesses when its board meets on June 5.
Gold extended losses to a third straight session, hitting 16-week lows as the dollar hovered near a two-month high, while weak physical demand in top buyer China also weighed.
Spot gold fell to $1,251.50 an ounce - its lowest since Feb. 4 - in early trade and was down 0.4 percent at $1,253.33. It dropped nearly 3 percent over the past two sessions.
Oil rose on signs of stronger demand from top oil consumer the United States. Brent was up 55 cents at $110.36 a barrel after losing 21 cents on Wednesday. U.S. crude oil gained 51 cents to $103.23.
(Reporting by Angela Moon; Editing by Dan Grebler)