GLOBAL MARKETS- Internet stocks cap Wall St losses; oil slips

* Revived demand for Internet stocks curbs Wall Street's

loss

* Oil prices fall as Chinese factory data disappoint

* U.S. bonds rally before jobs data; sterling near 5-year

peak

* May Day holiday mutes trading volume in Europe, Asia

(Updates market action, adds quote)

By Richard Leong

NEW YORK (Frankfurt: HX6.F - news) , May 1 (Reuters) - Wall Street stocks dipped on

Thursday, despite a resurgence in Internet shares, while

disappointing data on Chinese manufacturing activity knocked oil

prices to a three-week low.

U.S. bond prices rallied, with 30-year yields falling to

their lowest level since last June, as some traders bet that

U.S. payrolls data due on Friday would be weaker-than-expected,

following news of surprisingly weak first-quarter U.S. growth.

Gold prices lost some luster, falling as much as 1 percent

earlier, after the U.S. Federal Reserve reiterated confidence on

its economic outlook despite the slim 0.1 percent growth in U.S.

gross domestic product in the first three months of 2014.

"Internet is the place to be today," said Michael Matousek,

head trader at U.S. Global Investors Inc. in San Antonio, Texas.

"When you have a group that has been beaten up over the past

month, along with a market that is setting new highs, that's a

cue for momentum players to come back into the market."

Customer-review website operator Yelp Inc (NYSE: YELP - news) . led the

Internet sector a day after it reported strong revenue growth.

Its results buoyed related shares which were battered recently

on fears that they, along with momentum names in the biotech

sector, were overvalued. Yelp ended up 8.8 percent to $63.43

with 1.9 million shares changing hands, the second-heaviest

trading day since its IPO in March 2012.

Revived demand for Yelp, Facebook (NasdaqGS: FB - news) , Netflix (NasdaqGS: NFLX - news) and other

momentum stocks mitigated declines in shares of Exxon Mobil (TLO: XOM-U.TI - news)

, pharmaceutical distributor Cardinal Health (NYSE: CAH - news) and

aircaft maker Textron (NYSE: TXT - news) which pressured the Dow Jones

Industrial average below the record close it set on Wednesday.

The Dow Jones industrial average fell 22.09 points or

0.13 percent, to 16,558.75, the S&P 500 lost 0.28 points

or 0.01 percent, to 1,883.67 and the Nasdaq Composite

added 12.896 points or 0.31 percent, to 4,127.451.

May Day holidays in Europe, much of Asia and parts of Latin

America reduced trading volume.

London's blue-chip FTSE index closed up 0.4 percent

at its highest since early March, boosted by results from Lloyds

Banking Group and TV and media group BSkyB.

Upbeat earnings also spurred the biggest two-week rally in

Tokyo's Nikkei which ended up 1.3 percent.

The MSCI world equity index, which tracks

shares in 45 nations, edged up 0.1 percent, to 414.63.

WORRIES ABOUT CHINA

Equities markets overcame a brief hiccup after China's

official factory gauge rose slightly to 50.4 in April but came

in below a forecast of 50.5. A reading above 50 signals

expansion.

Concerns about energy demand from China, the world's No. 2

economy, together with high oil inventories in the U.S., sent

Brent crude below $107 a barrel before it trimmed some

losses. It ended down 31 cents, or 0.29 percent, at $107.76 a

barrel, while U.S. crude futures settled down $0.32, or

0.32 percent, at $99.42 per barrel.

As Chinese factory growth has struggled to accelerate,

Markit reported its U.K. manufacturing gauge rose to its

strongest level since November, propelling the sterling

to its highest against the dollar in nearly five years. The

pound was $1.6890 in late New York trading.

The greenback held steady against other currencies. The

dollar index, which tracks the greenback versus a basket

of six currencies, inched up 0.07 percent, to 79.528.

The dollar was held back by lower U.S. yields as some

traders scaled back bets on a relatively strong April jobs

figure in the wake of the dismal GDP report, analysts said.

The yield on the U.S. 30-year Treasury bond fell

5 basis points to 3.41 percent, its lowest since June.

Economists polled by Reuters projected a 210,000 increase in

non-farm jobs last month, up from 192,000 in March.

The risk that the U.S. economy might not recover from a weak

first quarter might keep the Fed from raising short-term rates

before the second half of 2015 and perhaps even cause the

central bank to slow its reduction of its bond purchase program.

Some investors don't see this occurring. "I don't think even

with a weaker-than-expected jobs figure we are going to see the

Fed stop tapering," said Carsten Quitter, chief investment

officer at Allianz Life Insurance of North America in

Minneapolis.

The Fed, as expected, said on Wednesday it will cut its

monthly buying of Treasuries and mortgage bonds by another $10

billion to $45 billion.

The continued wind-down of Fed stimulus led to a second day

of selling in gold. Spot bullion prices fell fell $6.83

or 0.53 percent, to $1,284.46 an ounce

(Additional reporting by Ryan Vlastelica in New York, Marc

Jones in London, Wayne Cole in Sydney; Editing by Leslie Adler,

Bernadette Baum and Meredith Mazzilli)