* European shares edge up after steep falls in previous session * Dollar broadly weaker amid doubts on timing of Fed stimulus pullback * Euro hits 2-week high after confidence data pick-up * MSCI Asia stocks ex-Japan at six-week low, Nikkei slumps * Wall Street seen opening mixed By Marc Jones LONDON, May 30 (Reuters) - Improved euro zone confidence data gave a lift on Thursday to European shares and the euro, after another five percent dive in Japan's Nikkei share index highlighted global jitters over the future of U.S. stimulus measures. The dollar slipped against major currencies before revised first quarter GDP figures due later in the session, with markets beset by doubts over when the U.S. Federal Reserve might slow its stimulus programme. Top European stocks climbed 0.4 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. "The market is being dominated by expectations of Fed tightening," said Daiwa securities economist Tobias Blattner. "German government bond yields have gone up quite significantly and after this massive rally equities are correcting to a certain extent." Share gains in Europe were underpinned by a bigger-than-expected improvement in the European Commission's monthly 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. Mining stocks also provided a lift, rising 1.8 percent as traditional safe-haven investment gold - which has fallen sharply this year as demand for riskier assets has risen - jumped more than 1 percent to a one-week high. The stronger euro zone confidence data saw the euro drift to a two-week high of $1.2974 against the dollar as economists revised the chances of an ECB rate cut next week. The dollar was weaker against most major currencies, but rose against the yen after sources told Reuters Japan's public pensions fund was considering allowing investment in domestic stocks to grow with a rallying market. The Nikkei had tumbled 5 percent to a five-week low earlier as the recent boost provided by the Bank of Japan's record $1.4 stimulus continued to wane and as focus now turns to the Fed. "It may seem illogical (for the forex market to follow the Nikkei), but a weaker yen led to optimism for stocks before, so right now the Nikkei's retreat has initiated a fall in the dollar-yen too," said Masashi Murata, senior currency strategist at Brown Brothers Harriman in Tokyo. WALL STREET CAUTION 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 and supported signs that a 10-month fall in peripheral euro zone yields could be drawing to a close. While the European Central Bank has made it clear it still has room to cut rates and make it easier to get cheap credit, the prospect of the Fed scaling back its aid has reminded markets that central bank largesse will not last forever. The U.S. job market and the economy as a whole may be strong enough in a few months to allow the Fed to pare its bond buying by a small amount, normally dovish Fed policymaker Eric Rosengren said on Wednesday. German Bund futures recovered some ground after a recent sell-off, though U.S. Treasury yields rose slightly in line with the Fed-linked caution. U.S. stock futures pointed at a mixed Wall Street open. Data due later includes jobless claims. Commodity markets were also focused on the uncertain impact a scale-back in Fed support would have on the global economy and the demand for natural resources as well as for the dollar which most raw materials are priced in. London copper, which has fallen 9 percent this year, hit a two-week low before rebounding and oil dipped back below $102 as it stayed at the bottom of its recent range. "Given the weak demand and over-supply, the pressure is definitely on the downside and that will continue until we see some evidence of strong economic growth," said Michael Hewson, an oil analyst at CMC Markets.