U.S. dollar off lows, global shares rally as central banks meet

NEW YORK (Reuters) - Shares rallied on Tuesday as a heavy session of data supported growth prospects heading into this week's three big central bank meetings, while the U.S. dollar came off its recent five week low.

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.

The dollar recovered from losses against the yen after U.S. single-family home prices rose in May, though the pace of gains cooled compared to the month before.

"Earnings are better than fears leading up to the earnings season, but we're close to a new high and with appropriate valuations. We're up against 1700 on the S&P so it would take a lot to make it move substantially higher," said Jack de Gan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire.

"The nearest things on the horizon are the Fed meeting and the jobs number so I think we're going to tread water here until that."

The Dow Jones industrial average was up 48.38 points, or 0.31 percent, at 15,569.12. The Standard & Poor's 500 Index was up 5.73 points, or 0.34 percent, at 1,691.06. The Nasdaq Composite Index was up 19.10 points, or 0.53 percent, at 3,618.24.

MSCI's world index was up 0.2 percent.

The FTSEurofirst 300 index of top European shares rose 0.1 percent.

Potash producers and related agriculture companies were volatile on stock markets everywhere after Russia's Uralkali dismantled one of the world's largest potash partnerships by pulling out of a venture with Belarus Potash Co.

Uralkali said the decision might lead to a fall in global potash price to below $300 per ton in the second half of 2013, from $400 per ton now.

In New York trade, Mosaic Co fell 23.2 percent, Potash Corp slid 22.9 percent, CF Industries Holdings dropped 2 percent and Agrium Inc fell 7.5 percent.

The dollar 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. It was last up 0.3 percent. The dollar was last up 0.3 percent against the yen.

(Reporting by Nick Olivari and Rodrigo Campos; Editing by Nick Zieminski)