* MSCI world index rises along with U.S. stocks
* U.S., China factory sector data supportive
* Euro zone PMIs show euro zone recovery intact (Updates with oil price settlements)
By Caroline Valetkevitch
NEW YORK, May 22 World stock indexes climbed on Thursday as data showed factory activity picked up in both the United States and China, while U.S. Treasuries prices slipped on the signs of growth in the world's largest economies.
The dollar rose against major currencies as the higher bond yields revived appeal for the greenback.
China's factory sector had its best performance in five months in May, while U.S. factory output growth hit its fastest pace since February 2011, providing support for stocks.
In Europe, an unexpected pickup in the service industry was offset by lackluster factory activity, though it was enough to show the euro zone's fragile recovery has some traction.
"The U.S. manufacturing (sector) is certainly in an expansion mode, and that's a good indication going forward, that it will remain on the bullish side of the equation for some time," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York. The data was helping to support stocks, he noted.
The United States endured a sluggish first quarter, which has given the Federal Reserve some pause, and minutes of its last policy meeting show it in no rush to raise rates.
MSCI's all-world equity index, which tracks shares in 45 nations, gained 0.5 percent. On Wall Street, the Dow Jones industrial average rose 27.8 points or 0.17 percent, to 16,560.86, the S&P 500 gained 7.55 points or 0.4 percent, to 1,895.58 and the Nasdaq Composite added 30.074 points or 0.73 percent, to 4,161.611.
European shares finished up 0.1 percent though off early highs as worries over the French economy pulled the Paris bourse lower.
The dollar index, reflecting the greenback's value against the euro, yen and four other currencies, gained 0.2 percent at 80.246, bringing its month-to-date gain to about 1 percent.
The euro was last down 0.26 percent, at $1.36, while the dollar gained 0.3 percent against the yen at 101.63 yen after hitting a 3-1/2-month low a day earlier.
U.S. 10-year Treasury yields, which have a good correlation with the dollar/yen pair, edged up to 2.55 percent. Last week, they hit 2.473 percent, the lowest since October.
Low-rated euro zone bonds stabilized as expectations the European Central Bank will ease monetary policy overshadowed concerns about EU elections.
GOLD GAINS, OIL SLIPS
In commodities, gold prices rose after Wednesday's Fed minutes indicated no intention to raise interest rates soon. Spot gold was up 0.4 percent to $1,294.34 an ounce.
Brent crude oil dipped 19 cents to settle at $110.36 a barrel, while U.S. crude fell 33 cents to settle at $103.74.
(Additional reporting by John Geddie in London, Angela Moon, Chuck Mikolajczak and Richard Leong in New York; Editing by Dan Grebler)