GLOBAL MARKETS-Stocks rise, dollar falls before G20, Fed

                                
 * Stocks up, dollar slips
                                
 * U.S. data reinforces expectations on Fed easing
                                
 * Investors await G20 meeting, earnings reports
                                
 * Caterpillar, other in U.S. report upbeat results
 (Updates with U.S. markets' open)
                                
 By Manuela Badawy and Jeremy Gaunt
                                
 NEW YORK/LONDON, Oct 21 (Reuters) - World stocks rose and
the dollar slipped on Thursday amid upbeat corporate earnings
and diplomatic wrangling over currencies.
                                
 U.S. data on the job market and regional business activity
reinforced expectations that the Federal Reserve would provide
another round of stimulus to boost the economy.
                                
 The data "means that the Fed still has some work to do.
They need to take some more precautions against the downside
risk to the economy," said Mark Vitner, senior economist at
Wells Fargo Securities in Charlotte, North Carolina.
                                
 New U.S. claims for unemployment benefits fell more than
expected last week but not enough to suggest much improvement
in the labor market, while the Philadelphia Federal Reserve
Bank's October business conditions index rose less than
expected.
                                
 The dollar remained under selling pressure before meetings
on Friday and Saturday by Group of 20 finance and central bank
chiefs in South Korea who will try to hammer out an agreement
to manage currency, trade and macroeconomic imbalances.
                                
 The latest Chinese data showed its economy was far from
overheating, suggesting Beijing's rate hike this week may be
enough for now to placate trading partners demanding a stronger
yuan to reduce trade imbalances. [ID:nTOE69K00X]
                                
 U.S. earnings remained in the spotlight, with Caterpillar
Inc <CAT.N> reporting strong quarterly results and raising its
full-year revenue forecast. [ID:nN18273532]
                                
 The Dow Jones industrial average <.DJI> was up 64.55
points, or 0.58 percent, at 11,172.52. The Standard & Poor's
500 Index  <.SPX> was up 5.98 points, or 0.51 percent, at
1,184.15. The Nasdaq Composite Index  <.IXIC> was up 16.03
points, or 0.65 percent, at 2,473.42.
                                
 Stock markets were generally higher, renewing a rally that
have been under way since September.
                                
 The MSCI all-country world index <.MIWD00000PUS> was up
0.73 percent on the day with its emerging market component
<.MSCIEF> leading the way, up 0.91 percent. MSCI's emerging
market index has gained 12 percent this year.
                                
 European stocks also rose, but uncertainties about earnings
prompted investors to take shelter in more defensive shares.
The FTSEurofirst 300 <.FTEU3> index of top European shares was
up 0.69 percent.
                                
 DOLLAR VOLATILITY
                                
 Currency volatility rippled through markets after comments
from U.S. Treasury Secretary Timothy Geithner late on Wednesday
in which he said major currencies were in balance.
                                
 The dollar jumped initially but the rally faded as
investors focused on the impact of a renewal of quantitative
easing by the Fed.
                                
 Effective dollar devaluation stemming from another round of
asset-buying by the U.S. central bank has spread tension across
markets over a potential currency war.
                                
 "Since it is clear that the direction is toward an
expansion of quantitative easing (in the United States), it is
hard to expect a sustained rebound in the dollar," said Taisuke
Tanaka, FX strategist at Nomura Securities in Tokyo.
                                
 The euro <EUR=> was up 0.41 percent higher at $1.4021
against the dollar as investors piled into the single European
currency in the belief that the interest rate differential with
its U.S. counterpart will continue to widen.
                                
 The U.S. Dollar Index <.DXY> down 0.27 percent at 76.966
from a previous session close of 77.171. Against the Japanese
yen, the dollar <JPY=> was down 0.09 percent at 81.05 from a
previous session close of 81.120.
                                
 The U.S. currency is down more than 10 percent against
major currencies over the past four months.
                                
 U.S. government debt prices were lower in light volume as
traders await the Fed's decision.
                                
 The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 6/32, with the yield at 2.5056 percent. The 2-year U.S.
Treasury note <US2YT=RR> was unchanged with the yield at 0.3507
percent. The 30-year U.S. Treasury bond <US30YT=RR> was down
6/32, with the yield at 3.9033 percent.
  (Additional reporting by Richard Leong, Lucia Mutikani,
Steven C. Johnson and Rodrigo Campos in New York; Editing by
Kenneth Barry)