GLOBAL MARKETS-Dollar set to end January with record run, European shares pause

* Dollar set for record-breaking run of monthly gains

* Russian central bank unexpectedly cuts rates

* Euro zone inflation falls further into negative territory

* U.S. Q4 GDP awaited later in the day

By Jemima Kelly

LONDON, Jan 30 (Reuters) - The dollar was poised to end January with its longest run of gains since it was floated in 1971 while European shares were set for their best monthly performance in three years, despite sagging slightly on Friday.

The dollar, bolstered by expectations the U.S. Federal Reserve will be the first major central bank to raise interest rates, has gained nearly 5 percent against a basket of currencies this month.

It paused on Friday at 94.752, ahead of U.S. GDP data due at 1330 GMT, which a Reuters poll tipped to show economic growth of 3.0 percent. But the currency stayed close to an 11-year high and was set to mark seven consecutive months of gains.

European shares also took a breather on Friday but were headed for strong monthly gains in anticipation of hundreds of billions of euros being pumped into the euro zone.

Russia surprised markets by cutting interest rates as fears of a Russian recession mount following a plunge in global oil prices and Western sanctions over the Ukraine crisis. The move put pressure on the rouble, which skidded as much as 4 percent against the dollar, and also bolstered expectations that Turkey will cut rates again next week, sending the lira to a new record low.

U.S. shares looked set to open lower, after surging late on Thursday as an upturn in oil prices, stronger-than-expected U.S. jobs numbers and a rally in Apple (NasdaqGS: AAPL - news) and Boeing helped offset some disappointing earnings. .

Having opened higher, European stocks dipped as troubled Banca Monte dei Paschi (Milan: BMPS.MI - news) di Siena lost 6.5 percent after sources said a planned capital increase at the lender might be bigger than expected.

The FTSEurofirst 300 index of top European shares was down 0.2 percent at 1,470.40 points, but still up 7.4 percent in January - on track to post its best monthly performance in three years and outpacing Wall Street where the S&P 500 is down 1.8 percent since the start of the year.

"It's a little pause ahead of the weekend, but there's no real selling pressure and technically, charts shows that indexes are still in a bullish trend. People are just cautious, with a couple of potential negative catalysts like Russia and Greece in mind, so it's tempting to book profits," Saxo Bank trader Andrea Tueni said.

European stocks have recently been lifted by expectations that a bond-buying programme by the European Central Bank will help the region's economic recovery, while a weaker euro and lower oil prices are seen reviving corporate profits.

Yields on euro zone bonds dropped, with deflation risks taking centre stage again after some reassurances from the new Greek government that it is looking for common ground with EU partners on its bailout.

Data from the 19-nation bloc showed inflation falling further into negative territory in January, with consumer prices falling 0.6 percent year-on-year.

EYES ON U.S GDP

The euro edged down against the dollar to $1.1305 as markets awaited U.S. GDP data.

The single currency is down over 6 percent for the month, its worst performance in 2-1/2 years, having fallen on the expectation, and then the confirmation, that the ECB would unleash QE to shore up the flailing euro zone economy.

Those gains have helped the dollar.

"There are a lot of investors waiting for a move higher in the euro to reload (on the dollar)," said Michael Sneyd, a currency strategist at BNP Paribas (Xetra: 887771 - news) in London. "We are still dollar bulls."

Gold edged up on Friday and was set for its biggest monthly gain in almost a year after a rally fuelled by the ECB's announcement of its 1.1 trillion euro easing programme.

Brent crude edged up to $49.3 a barrel, supported by renewed violence in Iraq, but with a persistent global supply glut keeping the market on course for a seventh straight month of declines, its longest bear run on record. (Additional reporting by Atul Prakash, Marius Zaharia and Patrick Graham in London and Lisa Twaronite in Tokyo; Editing by Janet Lawrence and Susan Fenton)