* U.S. stocks rise, Treasuries prices slip
* U.S. jobless claims unexpectedly rise in latest week
* Data reassures that Fed won't scale back soon on stimulus
* 7-year Treasury note auction draws buyers
* Dollar broadly weaker, Euro hits 2-week high after confidence data
By Ellen Freilich
NEW YORK, May 30 (Reuters) - U.S. stocks rose on Thursday as weaker-than-forecast economic data argued for continued bond buying by the Federal Reserve, while higher euro zone confidence aided European shares and the euro.
U.S. GDP grew 2.4 percent in the first quarter, slightly less than first reported, a sign of pain from Washington's austerity drive. New claims for unemployment benefits rose in the latest week, the government said. Pending home sales rose 0.3 percent in April, below expectations of a 1.1 percent rise.
The dollar fell to a three-week low against the euro after the weaker economic data. It erased all of its gains versus the yen after sources told Reuters Japan's public pensions fund was considering allowing investment in domestic stocks to grow with a rallying market.
Before the weaker U.S. economic reports came out, Japan's Nikkei share average dived 5.2 percent on concern the Fed could scale back its stimulus program later this year.
U.S. equities have been closely tethered to central bank policy, with shares tumbling on Wednesday as U.S. Treasury bond yields rose to their highest level in more than a year on concerns the Federal Reserve would curb its bond-buying program.
On Tuesday, reassurances from central banks around the world that programs would remain intact had boosted equity prices.
"Every time we get some sort of comment or article about a tapering off of the Federal Reserve's bond purchases coming sooner rather than later, we get a little bit of volatility; but overall the stock market has been pretty resilient in the face of that discussion," said Joe Bell, senior equity analyst at Schaeffer's Investment Research in Cincinnati, Ohio.
The Dow Jones industrial average was up 81.36 points, or 0.53 percent, at 15,384.16. The Standard & Poor's 500 Index was up 11.62 points, or 0.70 percent, at 1,659.98. The Nasdaq Composite Index was up 32.01 points, or 0.92 percent, at 3,499.52.
As most global stock markets rose, safe-haven U.S. debt retreated before the Treasury's seven-year note auction.
Yields on Treasuries have surged this month as more upbeat sentiment about the economy has prompted investors to sell bonds should the Fed pull back on its massive bond purchases.
The recent rise in yields helped the Treasury sell $29 billion in seven-year notes in this week's final sale of $99 billion in coupon-bearing debt.
"The seven-year note auction went very well, (drawing) the largest buyside bid share since February 2012," said John Canavan, fixed income analyst at Stone & McCarthy Research Associates in Princeton, New Jersey.
Benchmark 10-year notes were last down 1/32 in price to yield 2.12 percent. Those yields have surged from 1.61 percent at the beginning of May and reached a 13-month high of 2.24 percent in overnight trading on Wednesday.
Top European stocks climbed 0.3 percent as they steadied after heavy falls on Wednesday, but the drop in Japan's Nikkei in Asian trading left MSCI's world index at a three-week low.
Share gains in Europe were underpinned by a bigger-than-expected improvement in the European Commission's economic confidence survey, which showed morale picked up in all five of the euro zone's largest economies - Germany, France, Italy, Spain and the Netherlands.
The stronger euro zone confidence data caused the euro to rise to $1.3047 against the dollar as economists revised the chances of an ECB rate cut next week.
In the debt market, a small rise in Italy's borrowing costs as it sold 5- and 10-year bonds mirrored the result of a Spanish auction earlier in the week, supporting signs that a 10-month fall in peripheral euro zone yields could be drawing to a close.
German Bund futures recovered some ground after a recent sell-off even as U.S. Treasury yields rose.
Commodity markets were a little more buoyant.
London copper, which has fallen 9 percent this year, hit a two-week low before rebounding and Brent crude oil moved above $102 a barrel.