(Adds oil settlement prices)
* U.S. weekly jobless claims drop to two-year low
* Traders await summit, U.S. non-farm payrolls data
* Crude rises despite bearish inventory data
By Herbert Lash
NEW YORK, April 6 (Reuters) - Global equity markets and the dollar edged higher on Thursday, helped by fresh data showing a tighter U.S. labor market, as investors stayed cautious before the first meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping.
Key stock indexes in Europe and on Wall Street climbed but a gauge of global equities was little changed, with gains offset by a decline in emerging markets.
The dollar index extended gains after data showed new applications last week for U.S. unemployment benefits recorded their biggest drop in nearly two years.
Last week's jobless claims data, however, has little bearing on the March employment report due out on Friday. Claims rose during the survey week for nonfarm payrolls last month, suggesting some moderation in the pace of job growth.
"The market will be very remiss to do anything too sharp at this point, given that we have payrolls coming up," said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York.
The dollar index rose 0.15 percent, with the euro down 0.18 percent to $1.0643. The Japanese yen weakened 0.21 percent versus the greenback at 110.93 per dollar.
Trump faces pressure to deliver trade concessions with China for some of his most fervent supporters and to prevent a crisis with North Korea from spiraling out of control. However, White House officials have set expectations low for the meeting.
The market's main concern is that Trump and Xi may not see eye-to-eye on most things and that traders will infer this from their body language, said Thierry Albert Wizman, global interest rates and currencies strategist, at Macquarie Group in New York.
"Rather than a lack of agreement, however, the greater risk is a lack of deep engagement," he said.
On Wall Street, the Dow Jones Industrial Average rose 51.75 points, or 0.25 percent, to 20,699.9. The S&P 500 gained 5.89 points, or 0.25 percent, to 2,358.84 and the Nasdaq Composite added 12.22 points, or 0.21 percent, to 5,876.69.
The pan-European FTSEurofirst 300 index closed up 0.16 percent to 1,499.94, while MSCI's gauge of stocks across the globe fell 0.06 percent.
Oil prices rose nearly 1 percent, on track for a fourth straight day of gains, but analysts warned record high U.S. inventories could derail the rally.
U.S. crude rose 55 cents to settle at $51.70 a barrel and Brent settled up 53 cents at $54.89.
U.S. Energy Department data show crude inventories at record levels, leading some analysts to say speculative buying is starting to reach dangerous levels from a technical perspective.
"It's hard to justify the move on the on back of fundamentals," said Robert Yawger, director in energy futures at Mizuho.
U.S. Treasury yields fell slightly ahead of the U.S. jobs report on Friday.
Benchmark 10-year Treasury notes were last up 2/32 in price to yield 2.3480 percent.
U.S. gold futures gained 0.39 percent to $1,253.40 an ounce. Copper lost 0.29 percent to $5,878.00 a tonne.
Editing by Bernadette Baum and Nick Zieminski