* Federal Reserve meeting eyed for any extra stimulus
* Gold hits all-time high on U.S. economy worries
* Dollar eases against currency basket
By Emelia Sithole-Matarise
LONDON, Sept 20 (Reuters) - The dollar slipped and gold hit a record high on Monday as the possibility the Federal Reserve could signal further economic stimulus spurred demand for alternative assets.
European shares ended a four-session losing run, with the FTSEurofirst advancing by 0.7 percent as equity investors pushed aside for now concerns about Ireland's shaky banking sector which rocked markets on Friday.
The Fed is not expected to make any new monetary policy moves on Tuesday, but the post-meeting statement will be closely scrutinised for signals on the debate about whether further large-scale asset purchases are needed to support the sluggish recovery.
"There is plenty of pressure on the Fed to put forward what they are going to do to stop the U.S. going into a double dip recession. It will be the main focus of the week and the market could go either way, we expect trading to be quite volatile," said Will Hedden, sales trader at IG Index.
By 1020 GMT, the dollar had fallen 0.3 percent against a basket of currencies, taking the dollar index down to 81.16, near a five-week low hit last week.
The prospect the U.S. economy may require more quantitative easing -- often seen as currency-negative -- highlighted differences in policy outlooks among major central banks, with the Australian dollar hitting a two-year high on hawkish comments from the Reserve Bank of Australia.
"The consensus is that the Fed won't do anything tomorrow, but if they indicate that more QE may be on the way, it would send a strong signal to sell the dollar during the week," said Kasper Kirkegaard, currency strategist at Danske in Copenhagen.
Against the yen, the dollar was down 0.1 percent at 85.63 with investors cautious of taking big yen positions after Japan's intervention last week.
Japan intervened to sell yen for the first time in six years last week, partially interrupting a decline in the dollar that began when talk revived last month of the U.S. central bank opting for further quantitative easing -- effectively printing money.
Gold, which tends to benefit from economic uncertainty because many investors see it as a safe-haven asset, rose as high as $1,283.25 an ounce, eclipsing the previous all-time peak of $1,282.75 struck on Friday.
World stocks as measured by the MSCI world equity index added 0.4 percent while the Thomson Reuters global stock index gained 0.3 percent, lifted by the gains in European stocks.
Views differ among Fed officials about whether stubbornly high unemployment merits more aggressive policy intervention.
Recent data appear to indicate the U.S. economy is not sliding back into recession as some market watchers had feared, but investors are wrestling with how to value stocks as the global recovery loses momentum and sales outlooks grow more uncertain.
Uncertainty about the global economic recovery, fuelled by weak U.S. consumer sentiment data on Friday, and a public holiday in Japan also kept some investors sidelined, with oil steady after a drop last week while Asian equities eked out small gains.
U.S. crude oil futures, which slipped almost 4 percent last week, were little changed around $73.92 a barrel, with many traders waiting for the Fed's readout on the U.S. economy.
(Additional reporting by Naomi Tajitsu and Joanne Frearson; Editing by Ruth Pitchford)