* Dollar recovers from one-month lows vs yen * European shares rebound after recent drops, Wall Street higher * Japanese strategy eyed for gauge on commitment to stimulus NEW YORK, June 4 (Reuters) - Stocks around the world edged higher on Tuesday amid expectations the Federal Reserve will maintain its stimulus program to bolster the nascent U.S. economic recovery while the dollar climbed against major currencies. Markets were generally more settled than in recent sessions and as a minor lull in the week's busy schedule of central bank meetings and U.S. data offered a break from recent sharp moves. But many investors were holding off making big bets until Friday's U.S. non-farm payrolls report shows the employment situation, the key factor for the Fed's decision on monetary policy. On Wednesday, the market will get an anecdotal look at economic conditions from the Fed's Beige Book. "We are seeing the continuation of yesterday's relief rally after the big sell-off last week. We are still in relief buying mode but volatility has ticked up significantly here," said Ryan Detrick, senior analyst at Schaeffer's Investment Research in Cincinnati, Ohio. A report released on Monday showed the Institute for Supply Management's index of U.S. factory activity fell to its lowest since June 2009 and tempered expectations the Fed would retrace its stimulus measures. This left investors to focus more on Friday's U.S. jobs report than any other data this week. The Dow Jones industrial average was down 16.32 points, or 0.11 percent, at 15,237.71. The Standard & Poor's 500 Index was down 0.94 points, or 0.06 percent, at 1,639.48. The Nasdaq Composite Index was up 1.87 points, or 0.05 percent, at 3,467.24. But some analysts pointed to technical factors to say the market, with the S&P 500 up more than 15 percent so far this year, is not as strong as it looks. "It seems like the market just wants to go higher and higher, but one thing that worries me is the advance-decline numbers, which hit the worst in four years yesterday," said Frank Gretz, market analyst and technician for brokerage Wellington Shields & Co. in New York. The ratio of advancing stocks to declining stocks is used to gauge the strength of the index price trend and the chance it will reverse. European stocks were off the highs of the day but remained 0.2 percent higher and on course to snap a two-day losing streak that had left them at their lowest level since early May. MSCI's world share index, which tracks stocks in 45 countries, was up 0.35 percent. ECB MEETING With investors also keeping positions tight ahead of the European Central Bank and Bank of England monthly meetings on Thursday, German Bund futures dipped and peripheral euro zone debt edged up. A 10-month rally in euro zone debt has waned in recent weeks as talk of a cut in Fed stimulus has pushed up yields. The benchmark 10-year U.S. Treasury note was down 5/32, with the yield at 2.1444 percent. Commodity markets were also steadier. Copper climbed for a second session, while gold and Brent crude were both slightly softer . After the volatility of recent days caused by an escalation of political tensions, Turkish shares and the lira regained ground. That meant that most of the bigger moves of the day were once again on Asian stock markets. Japan's Nikkei rose 2 percent, its biggest one-day rise in three weeks as currency swings amplified moves ahead of Wednesday's announcement from Prime Minister Shinzo Abe on the third leg of his "Abenomics" stimulus strategy. The Nikkei was at a 5-1/2-year peak and up more than 50 percent on the year until two weeks ago but has since lost 15 percent as doubts about the $1.4 trillion stimulus drive have crept in. Abe's latest changes are likely to center on economic reforms but sources told Reuters the government could also include steps urging Japan's public pension funds to boost their investment in equities and overseas. "We are right at the start of a multi-year process probably," said Grant Lewis, a Daiwa Securities economist in London. The dollar gained 0.7 percent against the yen. AUSTRALIA HOLDS, ECB TO FOLLOW Australian shares rose 0.3 percent and the Aussie dollar dropped 1.3 percent after the country's central bank left interest rates unchanged, as expected, but said there was some scope for further easing. The firmer U.S dollar also pushed the kiwi dollar lower.