GLOBAL MARKETS-Stocks rebound from China slump, strong U.S. data helps

* Markets boosted by strong U.S. data, comments from Fed's Dudley

* Eyes on central banker meeting in Jackson Hole

* Wall St up; European, Asian markets close higher

* Crude oil sees sharp rebound on news of diminished supplies (Updates prices to afternoon, adds commentary)

By Sinead Carew

NEW YORK, Aug 27 (Reuters) - Stock around the world rallied on Thursday, shaking off a slump related to China growth fears, as strong U.S. economic data boosted investor sentiment and crude oil rebounded sharply.

All three major U.S. indexes were up less than 1 percent in afternoon trade, trimming earlier gains, following share rebounds in China and Europe. Increased appetite for risk sent government bond prices and the Japanese yen down Wednesday while the dollar advanced.

Annual U.S. gross domestic product growth was revised to 3.7 percent from the 2.3 percent rate reported last month and last week's jobless claims fell more than expected.

The data came after New York Fed President William Dudley had said Wednesday that arguments for a September rate increase "seem less compelling" than only weeks ago, given the threat posed to the U.S. economy by recent market turmoil.

On top of these factors investor nerves in China and Europe were helped overnight by Wall Street's Wednesday rally, as well as strong lending data from Europe, according to John Canally, Chief Economic Strategist for LPL Financial.

"The Chinese market went up overnight for the first time in several days and our GDP reminded everybody that the U.S. economy is not going into a recession," said Canally.

"People are just taking a second look at what caused the 10 percent correction in the first place. Not only is the Chinese market not connected to the global economy. It's not connected to the Chinese economy."

Markets around the world plunged earlier in the week as a slump in Shanghai shares fueled worries over China's economic health. While Beijing moved to ease policy late on Tuesday, stocks still ended weak that day, but Wall Street staged a strong comeback late Wednesday and its biggest daily gain in four years helped to calm investor nerves overseas.

At 3:06 p.m., the Dow Jones industrial average rose 67.74 points, or 0.42 percent, to 16,353.25, the S&P 500 gained 10.85 points, or 0.56 percent, to 1,951.36 and the Nasdaq Composite added 32.24 points, or 0.69 percent, to 4,729.78.

In Europe the FTSEuroFirst index of leading European companies had closed up 3.6 percent. Germany's DAX , France's CAC 40 and Britain's FTSE 100 also climbed more than 3 percent.

The two main Chinese indices surged 5.3 percent and 5.9 percent on Thursday, losing streak that had sent tremors around global financial markets.

U.S. Treasuries prices fell with most yields rising to one-week highs after the government upgraded its reading on second-quarter economic growth.

Dudley's comments came amid alarming market volatility as investors watch an annual meeting of the world's top central bankers in Jackson Hole, Wyoming for clues on how the turmoil may shake up policy plans.

Emerging markets stocks rebounded with MSCI's benchmark emerging market stocks index up 3 percent.

The dollar advanced for a third consecutive session bolstered by gains in global equities as well as the U.S. data. The dollar index, which measures the greenback against a basket of major currencies, was up 0.6 percent Thursday afternoon.

Crude oil rocketed more than 10 percent posting its biggest one-day rally since 2009 as recovering equity markets and news of diminished crude supplies set off a short-covering surge by bearish traders.

U.S. crude futures settled up 10.3 percent at $42.56 a barrel. The contracts had slumped to a 6 1/2-year low on Monday, dogged by a supply glut and China worries. Brent settled up 10.3 percent to $47.56.

Oil pared gains a little after settlement but U.S. crude and Brent futures were still up more than 8 percent late afternoon.

Copper was up about 3.8 percent, moving further away from Monday's six-year low.

(Additional reporting by Shinichi Saoshiro and Lisa Twaronite in Tokyo; Editing by Larry King and Nick Zieminski; To read Reuters Global Investing Blog click on http://blogs.reuters.com/globalinvesting; for the MacroScope Blog click on http://blogs.reuters.com/macroscope; for Hedge Fund Blog Hub click on http://blogs.reuters.com/hedgehub)