* Global manufacturing data underpins recovery hopes

* General Mills sees solid profit, stock jumps

* Investors fret about Thursday's June jobs report

* Dow up 0.7 pct; S&P 500 up 0.4 pct; Nasdaq up 0.6 pct

* For up-to-the-minute market news click [STXNEWS/US]
(Adds volume)

By Ellis Mnyandu

NEW YORK, July 1 (Reuters) - U.S. stocks rose on
Wednesday, the start of the third quarter, as reassuring
manufacturing data from China, Europe and the United States
reinforced hopes that the world's economy is on the road to
recovery.

A day after the benchmark S&P 500 wrapped up its best
quarter in a decade, investors plowed new money into stocks,
boosting growth-sensitive sectors like energy, industrials,
technology, materials and consumer discretionaries.

But with the release of the all-important June non-farm
payrolls data just a day away, some caution prevailed, causing
indexes to finish sharply off their highs.

A weaker U.S. dollar underpinned stocks of multinational
companies such as Coca-Cola (KO.N: Quote, Profile, Research), up 2.5 percent at $49.18,
as investors bet the U.S currency's decline might boost
overseas earnings. Coca-Cola is one of the best-known
defensive stocks, which are shares of companies deemed better
able to withstand an uncertain economy.

General Mills Inc (GIS.N: Quote, Profile, Research), the maker of Cheerios cereal,
also gave investors more reason to be optimistic about the
economy after the food company forecast a
stronger-than-expected annual profit, sending its stock up 3.9
percent to $58.18. For details, see [ID:nBNG512328]

"There are clearly signs that we are emerging from the
recession," said Maury Fertig, chief investment officer of
Relative Value Partners in Northbrook, Illinois. "We think the
economy has bottomed out and we'll see some positive GDP this
quarter."

Even so, volume was light because of the absence of most
market players in a holiday-shortened week. U.S. financial
markets will be closed on Friday for the U.S. Independence Day
holiday.

The Dow Jones industrial average .DJI rose 57.06 points,
or 0.68 percent, to 8,504.06. The Standard & Poor's 500 Index
.SPX gained 4.01 points, or 0.44 percent, to 923.33. The
Nasdaq Composite Index .IXIC shot up 10.68 points, or 0.58
percent, to 1,845.72.

Earlier in the session, indexes had risen more than 1
percent, but pared gains heading toward the close as
apprehension about Thursday's non-farm payrolls data crept
into the market.

COUNTDOWN TO PAYROLLS

The initial estimate, according to a Reuters poll of
economists, called for payroll losses of 355,000 non-farm jobs
last month. But an updated poll this week of 76 economists
raised the figure to 363,000 jobs. The department said in May
that 345,000 positions were eliminated by employers.

The unemployment rate is expected to have crept up to 9.6
percent -- its highest since June 1983 -- from 9.4 percent in
May. [ID:nN01511504]

The job data is due at 8:30 a.m. (1230 GMT) on Thursday.

Kraft Foods Inc (KFT.N: Quote, Profile, Research), another major U.S. food company,
jumped 5 percent to $26.61, following the outlook of General
Mills. Kraft topped the Dow's list of major advancers.

Chip makers ranked among the Nasdaq's biggest boosters,
with Intel Corp (INTC.O: Quote, Profile, Research) up 3 percent at $17.04.

In the latest readings on the global economy, surveys from
Europe showed manufacturing was shrinking less than initially
thought and in China's case, growing modestly.
[ID:nPEK138883]

Other data on Wednesday showed the U.S. manufacturing
sector contracted in June but at a slower pace than in May.
The Institute for Supply Management said its index of national
factory activity edged up to 44.8 to in June from 42.8 in May.
[ID:nN01366244]

Additionally, global outplacement consultancy Challenger,
Gray & Christmas data showed planned layoffs at U.S. firms
fell to a 15-month low in June. That news eclipsed the ADP
Employer Services payroll survey showing that private
employers cut 473,000 jobs in June.

Prospects for a better world economy lifted commodity
prices, boosting stocks in natural resource companies,
including miners, with Newmont Mining Corp (NEM.N: Quote, Profile, Research) up 3.2
percent at $42.18.

Shares of Chevron Corp (CVX.N: Quote, Profile, Research) rose 0.4 percent to $66.52,
while Exxon Mobil (XOM.N: Quote, Profile, Research) added almost 1 percent to $70.56.
Both stocks were off their best levels, however, after crude
oil futures reversed an initial climb that sent them above $71
a barrel earlier on Wednesday.

U.S. front-month crude CLc1 slipped 58 cents to settle
at $69.31 a barrel, after rising as high as $71.85 earlier.

On the New York Stock Exchange, only about 950.1 million
shares changed hands, way below last year's estimated daily
average of 1.49 billion, while on the Nasdaq, about 2.11
billion shares traded, also below last year's daily average of
2.28 billion.

Advancing stocks outnumbered declining ones by a ratio of
almost 3 to 1 on the NYSE, while on the Nasdaq, about two
stocks rose for every one that fell.
(Editing by Jan Paschal)