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LONDON (Reuters) - The dollar eased off a five-week low and shares inched up on Tuesday as a heavy session of European data and earnings supported growth prospects heading into this week's three big central bank meetings.
A pick-up in euro zone consumer and business confidence gave stock markets a boost as they await policy clues from the U.S. Federal Reserve, ECB and Bank of England this week.
It was also one of the busiest days of the European earnings season so far with over 40 of the region's major companies announcing results. .EU
Strong showings from French utility EDF and German chip-maker Infineon helped lift European shares .FTEU3 though disappointments from oil major BP and UK bank Barclays trimmed the gains to leave MSCI's world index .MIWO00000PUS up 0.1 percent by 1100 GMT.
Economic morale in the euro zone reached a 15-month high in July, surveys showed, underpinning Europe's chances of a gradual exit from nearly three years of economic downturn, while Spanish data showed the economy closer to emerging from its slump.
However, many investors were happier to stay on the sidelines, awaiting the outcome of the Fed's two-day meeting on Wednesday, and those of the ECB and Bank of England on Thursday.
The dollar .DXY continued to edge away from Monday's five-week low as investors viewed its sharp drop over the last two weeks as a chance to get back in ahead of the Fed meeting and this week's growth and jobs data.
"Personally I think the Fed is not going to want to rock the boat, but what could change market expectations is the U.S. data that is coming out," said Alvin Tan, FX strategist at Societe Generale.
"It is not only the Fed that is coming up tomorrow, we also have U.S. second quarter GDP, ISM data and on Friday we have non-farm payrolls... if these come in strong the market is going to start pricing in a faster tapering cycle again."
Currency traders were also watching the Australian dollar as hints from the central bank's governor of another rate cut at next week's RBA meeting sent it to a two-week low of $0.9085.
"The recent decline in the exchange rate seems to make sense from a macroeconomic perspective," Glenn Stevens told a charity lunch. "It would not be a major surprise if a further decline occurred over time."
Wall Street was expected to open around 0.2 percent higher when trading resumes later, with two days of minor declines expected to attract some buying.
Earlier in Asia, Japan's Nikkei .N225 bounced 1.5 percent as the yen eased, though stocks elsewhere in the region finished flat as China's central bank's first injection of funds into money markets since February was balanced by some mixed data.
Commodities stayed under pressure before the Fed meeting and on concerns about China's outlook. Analysts polled by Reuters before data on Thursday forecast its manufacturing sector may have shrunk in July for the first time in 10 months.
Copper hit a new three-week low as it fell about 1.4 percent to $6,785 a tonne, gold inched down to $1,322.5 an ounce and .U.S. crude lost 0.6 percent to drop below $104 a barrel.
Europe's debt markets were quiet again with Bunds little changed before this week's ECB meeting where the central bank is expected to give some details on its plans to provide "forward guidance" on rates for the first time.
Italian debt made minor gains as its treasury comfortably sold 6.75 billion euros of bonds as planned.
Silvio Berlusconi faces a Supreme Court ruling this week that could see him banned from public office and potentially hurt Italy's shaky coalition government.
But "Italy is doing fairly well given the political turmoil," DZ Bank strategist Christian Lenk said. "The market is still ignoring the issue because it's (in its) early stages."
Additional reporting by Marius Zaharia; Editing by John Stonestreet/Ruth Pitchford