* World equities rally after Q3 U.S. GDP expanded 3.5 pct
* U.S. economy grows for first time in more than a year
* Dollar, Treasuries down; oil rises above $80 a barrel (Updates with U.S. markets activity, adds byline, changes dateline; previous LONDON)
By Jennifer Ablan
NEW YORK, Oct 29 (Reuters) - World stocks recovered from three-week lows on Thursday after U.S. gross domestic product data showed the world's biggest economy returned to growth last quarter following the worst recession in seven decades.
The data, showing annualized growth of 3.5 percent in the third quarter, compared with a forecast for 3.3 percent. Some strategists and traders were surprised as they had been downgrading their outlook after disappointing data in recent days. For details, see [ID:nN29354547].
"The market was beginning to price in a weaker outlook, but today's GDP report was good across the entire spectrum," said John Spinello, chief Treasury strategist at Jefferies & Co in New York.
For their part, top investors around the world rebuilt equity holdings during a shaky October for stock markets on the view that the economy would not fall back into recession given accommodative central bank policies. [ID:nLAG005871].
The MSCI world index <.MIWD00000PUS> turned positive after the data, rebounding from three-week lows on Wednesday, the index's biggest one-day selloff since August. After 1 p.m., the index was up about 1.40 percent.
U.S. equities also rallied. The Dow Jones industrial average <.DJI> was up 151.07 points, or 1.55 percent, at 9,913.76, while the Standard & Poor's 500 Index <.SPX> was up 18.00 points, or 1.73 percent, at 1,060.63. The Nasdaq Composite Index <.IXIC> was up 33.47 points, or 1.63 percent, at 2,093.08.
In Europe, the FTSEurofirst 300 index <.FTEU3> jumped 1.77 percent, having fallen around 0.2 percent earlier.
Emerging stocks <.MSCIEF>, which had suffered heavily from this week's global markets shakeout and retreat from risk, recovered from early losses to trade up 0.52 percent
In energy and commodities prices, U.S. light sweet crude
oil
The Reuters/Jefferies CRB Index <.CRB> was up 6.11 points, or 2.26 percent, at 276.50.
BONDS VOYAGE
U.S. Treasury debt prices fell as the U.S. GDP figures suggested the economy would emerge from recession faster and as stocks advanced.
The benchmark 10-year U.S. Treasury note
At the longer end of the yield curve, the 30-year U.S. Treasury bond
In addition, the dollar was down against a basket of major trading-partner currencies, with the U.S. Dollar Index <.DXY> down 0.67 percent at 75.915 from a previous session close of 76.425.
The euro