(Updates lede, headline and prices throughout with U.S. market

open)

By Huw Jones and Chibuike Oguh

LONDON/NEW YORK, Aug 9 (Reuters) -

Global shares extended gains on Friday, recovering further

from their recent big sell-off and boosted by positive economic

data and signals from Fed policymakers that they could cut rates

as early as September.

A trio of Federal Reserve policymakers indicated on Thursday

that they were more confident that inflation is cooling enough

to cut rates, and this - along with a bigger-than-expected fall

in U.S. jobless claims data - helped to underpin the recovery.

The MSCI All Country stock index, was up

0.40% to 784.92 points, recovering much of the ground lost

during the week.

On Wall Street, all three indexes pared early session losses

and were trading higher led by gains in technology, consumer

discretionary, healthcare and financial stocks.

The Dow Jones Industrial Average rose 0.11% to

39,490.53, the S&P 500 gained 0.33% to 5,336.68 and the

Nasdaq Composite gained 0.29% to 16,709.13.

In Europe, the STOXX index of 600 companies was up

0.55%, with the loss for the week all but erased. In a sign of

calmer nerves, the VIX index, also known as Wall Street's

'fear gauge', tumbled nearly 2%, a far cry from its record

one-day spike on Monday.

Divergent central bank interest rate moves, a repricing of

recession probability in the United States, thinner liquidity in

August accentuating volatility, and Middle East tensions had all

combined a week ago to trigger the sharp sell-off in stocks

after their months-long winning streak.

Some analysts urged caution despite this week's strong

recovery.

"We are still in the month of August, so we can still have

some volatility," said Marie de Leyssac, portfolio manager at

Edmond de Rothschild Asset Management.

Investors will continue to study employment data, keep an

eye on the Bank of Japan, and particularly on the annual meeting

of global central bankers hosted by the Kansas City Fed in

Jackson Hole later this month, she said.

"This year I think it is a really important meeting because

we will have more insight into what (Federal Reserve Chair)

Jerome Powell sees for the future, and maybe more insight on the

path to lower rates," de Leyssac said.

Before then, investors will scrutinise next week's U.S.

consumer prices and retail sales figures for fresh evidence on

chances of the economy escaping a hard landing.

NIKKEI RECOVERS

Japan's Nikkei stocks benchmark closed 0.6% higher,

erasing most of the losses since a 12.4% crash on Monday.

The Nikkei has managed to claw back most of those losses,

which were prompted by fears of recession and the unwinding of

investments funded by a soft yen, finishing the week with a

comparatively tame 2.5% decline.

The yen also veered from negative to positive

through Friday's session, last trading at 147.060 per dollar.

MSCI's broadest index of Asia-Pacific shares outside Japan

climbed 1.66%, more than reversing the drop from

Thursday. For the week, it has reversed earlier losses to be

largely flat.

"The prospect of better-than-feared U.S. growth and a weaker

yen constrain the fundamental and technical risks that inspired

the extreme volatility experienced at the start of the week,"

said Kyle Rodda, a senior financial market analyst at

Capital.com.

Oil prices were headed for weekly gains of around 3%

as fears of a widening Middle East conflict persisted, with

Brent crude futures up 0.35%, at $79.44 a barrel while

U.S. West Texas Intermediate crude futures added 0.45% to

$76.53.

The U.S. dollar index, which measures the greenback

against a basket of currencies including the yen and the euro,

fell as markets gave up bets on an emergency rate cut from the

Fed. It fell 0.2% at 103.07, with the euro up 0.05% at

$1.0923.

Bond yields have climbed this week with safe-havens in less

demand, but began easing as confidence returned to markets. The

yield on benchmark U.S. 10-year notes fell 5.7 basis

points to 3.94%.

Gold prices were a touch firmer, with spot gold

adding 0.09% to $2,428.96 an ounce. U.S. gold futures

fell 0.09% to $2,420.10 an ounce.