* Europe stocks relinquish early gains
* China PMI inches up but points to weakness ahead
* Dollar falls after manufacturing data (Adds close of European markets)
By Chuck Mikolajczak
NEW YORK, Oct 1 (Reuters) - Global equities edged lower on Thursday and commodities retreated from early gains as investors continued to question the depths of China's slowdown and the timing of an interest rate hike from the U.S. Federal Reserve.
The Purchasing Managers' Index indicated China's manufacturing shrank again in September, suggesting the world's second-largest economy is still cooling more rapidly than expected a few months ago, but kept fears of a hard landing for the world's second-largest economy at bay. ID:nL3N11Z2IZ
China's markets will be closed until Oct. 8 for the National Golden Week holidays.
"We are still trying to find the bottom. It is an evolutionary process," said Scott Wren, senior global strategist for Wells Fargo (NYSE:WFC) Investment Institute in St. Louis.
"We need some better clarity about what is going on in China. Some stability in these commodity markets would be kind of nice too."
Wall Street lost ground as economic data on the labor market and manufacturing gave mixed messages on the state of the U.S. economy, further clouding the picture on the timing of an interest rate hike from the U.S. Federal Reserve. ID:nL1N1210UK
Investors will look to Friday's key payrolls report in hopes for more clarity for when the Fed will begin raising rates.
The Dow Jones industrial average .DJI fell 122.89 points, or 0.75 percent, to 16,161.81, the S&P 500 .SPX lost 10.71 points, or 0.56 percent, to 1,909.32 and the Nasdaq Composite .IXIC dropped 39.56 points, or 0.86 percent, to 4,580.61.
The FTSEuroFirst 300 index .FTEU3 in Europe slipped 0.4 percent, while MSCI's all-country world index .MIWD00000PUS shed 0.05 percent.
Europe pared earlier gains and turned negative after weaker euro zone manufacturing growth, with phone stocks leading the way after a capital raising move at Altice ATCA.AS to fund a U.S. acquisition. ID:nL5N12143O
Glencore (LONDON:GLEN) shares ended down 0.6 percent in London despite the company's assurances that its debt-cutting plans remain on track and a decision by board member and legendary banker John Mack to buy $600,000 worth of stock. ID:nL5N1211UF
The PMIs in Europe came a day after official data showed consumer prices fell again in September, adding to pressure on the European Central Bank to expand its stimulus program, already set at more than 1 trillion euros.
In currency markets, the dollar .DXY fell 0.3 percent to in the wake of the U.S. manufacturing data. ID:nL5N1212RO
Commodities markets also pulled back after showing brief signs of stabilizing. The Thomson Reuters Jefferies CRB Index .TRJCRB of 19 commodity prices was off 0.4 percent at 193.76 after reaching a high of 195.48.
U.S. crude CLc1 was down 0.24 percent at $44.97 a barrel after a climb of nearly 4 percent boosted by a rally in U.S. gasoline on worries about potential damage to oil installations from a hurricane headed for the U.S. East Coast. Brent crude LCOc1 slipped 0.6 percent to $48.08 a barrel after climbing as high as $49.84. ID:nL5N1210X0
Copper CMCU3 slipped as earlier optimism over the China data faded, but held near two-week highs, which analysts expected the metal to once again test. ID:nL3N1212U7
Three-month copper on the London Metal Exchange lost 0.6 percent at $5,127 a tonne after hitting two-week highs of $5,230.