* European shares steady near 5-year highs
* Euro seen vulnerable to ECB policy easing
* Wall St set to open weaker as taper debate dominates
* Commodities supported by hopes of central bank liquidity
By Richard Hubbard
LONDON, Nov 5 (Reuters) - European shares halted gains just below five-year highs and the euro steadied near seven-week lows on Tuesday as uncertainty over the European Central Bank's next policy move sapped investor enthusiasm.
U.S. stock index futures pointed to a weaker open, putting the S&P 500 on track to halt a two-day winning streak, as traders waited for factory data to shed light on when the Federal Reserve may trim its monetary stimulus.
Markets are on edge over the next moves by both central banks after a sharp drop in euro zone inflation opened the door to a rate cut, while a run of mixed U.S. economic data cast doubt on the expected timing of the Fed's tapering.
In Europe investors remain split on how the ECB may decide to tackle what is set to be very subdued growth across the region throughout 2014, according new European Commision forecasts. [ID:nL5N0IQ1J7}
"I wouldn't be surprised if we get a rate cut, just to send a signal," said Markus Schomer, chief economist at fund manager's PineBridge Investments.
"A rate cut could at least help in lowering the value of the euro," Schomer said, adding that extending more ultra-cheap loans to banks would have greater impact.
But Koen Maes, global head of asset allocation at Dexia Asset Management said: "I don't think they will cut rates, because frankly it wouldn't change anything at this point in terms of impact on the economic recovery."
The policy risks left the broad FTSEurofirst 300 index of top European shares slightly lower by midday by 0.2 percent though only after it touched a level not seen since mid-2008.
The euro traded just under $1.35 for most of the morning session, holding near a seven-week trough of $1.3442 set on Monday.
The prospect of both euro zone and U.S. central banks supporting the global economy helped keep MSCI's world equity index near its strongest level since 2008, easing just 0.1 percent.
CENTRAL BANKS RULE
Investors are now awaiting Friday's October non-farm payrolls data to see if the unemployment rate eases from the current 7.2 percent. Economists in a Reuters survey expect the rate to have edged up. The Fed has promised to hold rates ultra-low at least until unemployment drops to 6.5 percent, provided inflation remains mild.
Before that, third-quarter gross domestic product data on Thursday will help show how strong the momentum in the economy was before last month's partial government shutdown.
The heavy flow of data left the dollar index, which measures the greenback against six major currencies, holding just above a nine-month low of 78.998 hit on Oct. 25.
However, against the Japanese currency, the dollar fell about 0.3 percent to 98.25 yen following a reaffirmation by Japan's central bank on Monday that it would do everything necessary to reflate its economy. [ID:nL3N0IQ2IQ}
Only China now looks likely to buck the tend for more monetary policy support. New Premier Li Keqiang said in a speech published in full late on Monday that adding extra stimulus would be more difficult since printing new money would cause inflation.
Asian shares struggled as a result slipping about 0.2 percent, though Japan's Nikkei stock average bounced off its lows and managed a 0.2 percent gain.
Australian shares bucked the downtrend to head back toward last month's five-year high after the Reserve Bank of Australia kept its cash rate steady at a record low of 2.5 percent as widely expected.
In commodity markets the ultra-loose monetary policy prospects helped gold hold firm at $1,314.50 an ounce. Copper added 0.1 percent to $7,158 a tonne.
Brent crude was slightly firmer at $106.36 a barrel but close to the four-month low touched on Monday on worries over a prolonged outage from key oil exporter Libya.