US STOCKS-Wall St rallies as rate cuts relieve some anxiety

* Optimism about global interest-rate cuts buoy sentiment

* GDP data shows U.S. economy shrank less than expected

* Colgate-Palmolive, Exxon Mobil top profit estimates

* Dow up 1.8 pct, S&P 500 and Nasdaq gain 2.2 pct (Updates to mid-afternoon, changes byline)

By Leah Schnurr

NEW YORK, Oct 30 (Reuters) - U.S. stocks gained on Thursday, buoyed by hopes that interest-rate cuts by global central banks, including the U.S. Federal Reserve, will help stave off a prolonged downturn.

Investors also found support in signs that efforts to loosen up clogged credit markets were taking hold as the rate that banks charge to lend dollars to each other fell, freeing up cash needed to avert a sharp slowdown.

Colgate-Palmolive Co rose 8.4 percent to $65.05 on the New York Stock Exchange after the consumer products maker posted quarterly profit that beat estimates.

Although data showed the U.S. economy experienced its sharpest contraction in seven years in the third quarter, the reading on gross domestic product was slightly better than expected.

"As the central bank interventions and interest-rate easings find their way into the markets and show signs of having a positive impact on borrowing costs, it then allows the market to really focus on more of the economic fundamentals and debate the question of just how severe the downturn's going to be and just how long it's going to be," said Craig Peckham, equity trading strategist at Jefferies & Company in New York.

The Dow Jones industrial average rose 163.68 points, or 1.82 percent, to 9,154.64. The Standard & Poor's 500 Index gained 20.20 points, or 2.17 percent, to 950.29. The Nasdaq Composite Index climbed 36.09 points, or 2.18 percent, to 1,693.30.

On Nasdaq, shares of Apple Inc, maker of the iPhone and iPod, rose 6.9 percent to $111.76, while Intel shot up 6.5 percent to $15.91.

Technology shares are among the sectors that analysts see poised to be the biggest beneficiaries in an economic revival.

The market's gains came a day after the Fed cut its benchmark fed funds rate for overnight bank loans by 50 basis points, or a half-percentage point, to 1 percent. The move was followed by rate cuts in Taiwan, Hong Kong and China.

Japan is expected to cut rates on Friday, while the European Central Bank, the central bank of Australia and the Bank of England are expected to cut rates next week.

But investors remain concerned that the efforts to shore up the economy might take longer to yield sustainable results and brighten the profit picture.

Exxon Mobil fell 1.3 percent to $73.72 as some investors sold the stock in a bout of profit-taking after the major oil company's profit exceeded expectations.

Shares of Hartford Financial Services Group Inc dove 49.2 percent to $10.10 after the property and life insurer reported a surprisingly large quarterly loss, raising concern that it may need to raise more capital.

Prudential Financial Inc shed 13.4 percent to $30.54 the day after it swung to a quarterly loss that marginally missed the Street's expectations. (Editing by Jan Paschal)