GLOBAL MARKETS-Wall St, dollar up on possible central bank moves

* Wall Street rises for second straight session

* China data, QE prospects lift European shares

* China slows less than expected, IMF cuts global outlook

* Gold gains

By Michael Connor

NEW YORK, Jan 20 (Reuters) - Equities rose worldwide on Tuesday, with Wall Street reversing early losses and the dollar rising 1 percent against the Japanese yen, as diminishing global growth prospects bolstered hopes for central bank stimulus.

Crude oil prices fell nearly 2 percent after the International Monetary Fund cut its 2015 global economic forecast on lower fuel demand and key producer Iran hinted prices could drop to $25 a barrel without support from the Organization of the Petroleum Exporting Countries.

U.S. crude futures closed off 85 cents at $47.99 per barrel, keeping the commodity near its lowest level since 2009 after a fall of more than 55 percent since June.

The greenback strengthened on the IMF forecasts, which showed the United States on a faster growth trajectory than most other major economies. The outlook came after China reported its slowest pace of growth in 24 years.

China's economy grew 7.4 percent in 2014, just below the official 7.5 percent target, but above the 7.3 percent projected by analysts.

The dollar rose on Tuesday to a one-week high against the yen, at 118.87 yen, as the Chinese data stirred speculation among currency traders that Japan's central bankers might ease policy and curb demand for the safe-haven Japanese currency. The dollar was last at 118.77 yen.

The IMF cut its forecast for global growth in 2015 to 3.5 percent from 3.8 percent, and called on governments and central banks to pursue accommodative monetary policies and reforms.

Expectations the European Central Bank would announce plans later this week to inject more stimulus into the euro zone economy helped lift European shares to a seven-year high, and buoyed investor appetite for risk. The pan-European FTSEurofirst 300 ended 0.9 percent higher.

"It looks like the Fed is super happy to pass that torch to the next central bank, and that would be the ECB as our contestant today," said Kim Forrest, senior equity research analyst, Fort Pitt Capital Group in Pittsburgh.

Wall Street also gained on hope central banks would move to spur economic growth, after earlier being pulled lower by consumer discretionary and healthcare shares.

The Dow Jones industrial average rose 3.66 points, or 0.02 percent, to 17,515.23, the S&P 500 gained 3.13 points, or 0.15 percent, to 2,022.55 and the Nasdaq Composite added 20.46 points, or 0.44 percent, to 4,654.85.

U.S. government bond prices rose, as investors took positions for higher yields ahead of anticipated rate cuts outside the United States. The benchmark 10-year note rose 3/32 to yield 1.8034 percent. The 30-year jumped 1-10/32 and yielded 2.3784 percent, near record lows set last week.

Record (LSE: REC.L - news) low yields on German and other European sovereign debt fed demand for U.S. Treasuries, which pay far higher yields, even as the Federal Reserve is expected to increase interest rates this year as the U.S. economy improves.

The worries about global economic growth helped lift gold prices 1.5 percent to highs last seen in August. Spot gold was last at $1,292.50 an ounce after touching a session high of $1,297, according to Thomson Reuters data.

(Reporting by Michael Connor in New York; Editing by Leslie Adler, Meredith Mazzilli and Andre Grenon)