* MSCI world index rises, U.S. stocks up in early trading
* U.S., China factory sector data supportive
* Euro zone PMIs show euro zone recovery intact (Updates with U.S. market openings, changes dateline; previous LONDON)
By Caroline Valetkevitch
NEW YORK, May 22 (Reuters) - World stock indexes edged higher 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 turned in its best performance in five months in May, while U.S. factory output growth hit its fastest pace since February 2011, reports showed, providing some support for stocks globally.
In Europe, an unexpected pickup in the service industry was offset by lackluster factory activity, but was enough to show that the euro zone's fragile recovery has some traction.
The United States endured a sluggish first quarter, with poor weather blamed for underwhelming data. This has given the Federal Reserve some pause, with minutes of its last policy meeting showing it was in no rush to raise interest rates.
Other U.S. data on Thursday showed a higher-than-expected number of Americans filed new claims for unemployment benefits last week.
"We have been in a two-steps forward, one step back progression on the (U.S.) economy and that can be extended to the global economy as well," said Jim Russell, senior investment strategist at U.S. Bank Wealth Management in Cincinnati.
MSCI's all-world equity index, which tracks shares in 45 nations, gained 0.4 percent. On Wall Street, the Dow Jones industrial average rose 16.75 points, or 0.10 percent, at 16,549.81. The Standard & Poor's 500 Index was up 5.78 points, or 0.31 percent, at 1,893.81. The Nasdaq Composite Index was up 25.21 points, or 0.61 percent, at 4,156.75.
European shares were up 0.1 percent after paring early gains as worries over the French economy pulled the Paris bourse lower on the day.
In the foreign exchange market, the dollar index gauging its value against the euro, yen and four other currencies was up 0.2 percent at 80.223, bringing its month-to-date gain to about 1 percent.
U.S. 10-year Treasury yields, which have a good correlation with the dollar/yen pair, edged up to 2.54 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.
In commodities, gold prices rose after Wednesday's Fed minutes indicated no intention to raise interest rates soon. Spot gold rose 0.5 percent to $1,297.60 an ounce.
Brent crude oil inched up on the better-than-expected data on China's manufacturing industry, which suggested a brighter outlook for demand in the world's No. 2 oil consumer. Brent crude was up 14 cents at $110.69 a barrel, while U.S. crude fell 13 cents to $103.94.
Additional reporting by John Geddie in London; Chuck Mikolajczak and Richard Leong in New York; Editing by Dan Grebler