* Euro rebounds vs dollar, yen after recent falls
* Mkt takes a breather ahead of U.S. GDP data at 1230 GMT
* Higher-yielding Aussie, yen also rebound; stocks edge up
(Updates prices; changes byline, dateline; previous TOKYO)
LONDON, Oct 29 (Reuters) - The euro edged higher against the dollar and the yen on Thursday as the market took a breather ahead of key U.S. gross domestic product data which is expected to show a return to growth in the third quarter.
A solid reading could help foster some renewed optimism about the global economy, but sentiment stayed shaky after a slew of recent weak U.S. data and sharp falls on equity markets that has sparked steep gains for the dollar and the yen.
Economists estimate that the government's advance estimate will show GDP grew 3.3 percent in the third quarter, the first quarter to show positive growth since the second quarter of 2008 when the economy eked out growth of 1.5 percent.
The euro earlier fell to its lowest in two weeks against the greenback and the yen, and its modest bounce on Thursday still left it not far from those lows.
"The U.S. GDP numbers will be very important and perhaps the market is a bit hesitant ahead of this," said Elisabeth Andreew, currency strategist at Nordea in Copenhagen.
"We've had a big sell-off on stock markets and it seems the market is getting a bit of a reality check after such a huge rally. This has consequences for currencies, with the dollar and the yen benefitting," she said.
At 0843 GMT, the euro edged up 0.2 percent against the dollar to $1.4742 and was up 0.3 percent at 133.69 yen, recovering from earlier lows of $1.4683 and 132.81 yen respectively.
Sentiment was helped a little by a small rebound on stock markets, with European shares up 0.3 percent.
The dollar index fell 0.1 percent to 76.314. It has gained just over 1 percent this week, leaving it on course for its biggest weekly gain in nearly five months.
Perceived higher-risk currencies, which have come under heavy pressure recently, also rebounded, with the Australian dollar up 0.5 percent against the dollar at $0.9025 and up 0.5 percent against the yen at 81.90 yen.
The New Zealand dollar rose 0.6 percent against the dollar. It had fallen to a three-week low after the Reserve Bank of New Zealand (RBNZ) dropped its easing bias as expected but faced down market pressure for a rate rise as soon as early 2010.
"The past few days has been a correction of the dollar's sell-off, which had gone too far," said Mitsuru Sahara, chief manager of currency derivatives trading at Bank of Tokyo-Mitsubishi UFJ in Tokyo.
The Australian dollar fell around 2 percent against the U.S. dollar on Wednesday, clocking up its biggest one-day fall in nearly two months, while the kiwi shed 3 percent, its steepest drop since June, and lost 4 percent on the yen, its biggest decline since February.
Both have been favoured plays against the low-yielding dollar and yen this year as investors have anticipated higher interest rates in economies seen as recovering faster from the global downturn, and the Aussie has risen about 40 percent against the greenback since early March.
U.S. GDP EYED
Thursday's data is expected to reveal that the world's largest economy has turned a corner, but U.S. data this week has raised questions about a sustained recovery, with consumer confidence dipping to recessionary levels and new home sales falling unexpectedly.
Goldman Sachs on Wednesday cut its forecast for GDP growth to 2.7 percent from 3.0 percent after a report on durable goods, noting that shipments have been somewhat weaker.
Given the risk-trade correction underway, some dealers said currency markets might react more to weaker figures than stronger ones, and if so, that could give the dollar a bit more strength short-term.
"But the reaction to the GDP data could be limited as investors are probably waiting for big events like the Fed's policy meeting and the key U.S. jobs report next week," Sahara at Bank of Tokyo-Mitsubishi UFJ in Tokyo said.
European data due on Thursday will also be watched, including euro zone sentiment indicators at 1000 GMT.
(Additional reporting by Charlotte Cooper in Tokyo; Editing by Andy Bruce)