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* July PCE data in line with expectations

* Salesforce climbs on revenue forecast raise

* Futures up: Dow 0.45%, S&P 0.19%, Nasdaq 0.02%

Aug 31 (Reuters) - The S&P 500 and the Dow were set to open higher on Thursday as a keenly awaited inflation reading came in line with expectations, keeping alive hopes the Federal Reserve could pause its monetary tightening.

The Commerce Department report showed the personal consumption expenditures (PCE) price index, considered to be the Fed's preferred inflation gauge, climbed 3.3% in July, on an annual basis, meeting expectations of a 3.3% rise.

Excluding volatile food and energy components, the core PCE price index rose 4.2% in July, on an annual basis, also in line with estimates.

Traders' bets on a pause in rate hikes for the Fed's September policy meet remained intact at 88.5% following the data.

"This data lines up very well with a economy that seems to be moderating to a sustainable pace, which likely indicates the Fed is done with raising rates," said Art Hogan, chief market strategist at B Riley Wealth.

"If inflation continues to work its way lower, by the time we get into the middle part of next year, they'll (Fed) likely feel like it's overly restrictive."

Keeping investor sentiment in check, the weekly jobless claims for the week ended August 26 fell to 228,000, compared with estimates of 235,000 claims.

The S&P 500 index closed at a near three-week high on Wednesday after data showing a softer-than-expected growth in private payrolls raised hopes the Federal Reserve could pause rate hikes.

The index has fallen 1.6% in August due to declines in the first half of the month on fears of interest rates staying higher for longer.

Also boosting S&P 500 and Dow futures on Thursday, shares of Salesforce rose 6.9% before the bell on upbeat sales forecasts from the cloud-based software provider as it benefits from price hikes and a resilient demand.

Investors also parsed Atlanta Fed President Raphael Bostic's comments as he made a case against further U.S. interest rate hikes, saying monetary policy was tight enough to bring inflation down to 2% over a "reasonable" period.

China's manufacturing activity contracted for a fifth straight month, stoking concerns about demand prospects in the world's second largest economy.

The dismal data sent U.S.-listed shares of Chinese companies including PDD Holdings, JD.com, Baidu and Alibaba down between 0.9% and 2.3%.

At 8:58 a.m. ET, Dow e-minis were up 156 points, or 0.45%, S&P 500 e-minis were up 8.5 points, or 0.19%, and Nasdaq 100 e-minis were up 3.75 points, or 0.02%.

Among other stocks, Dollar General slumped 16.8% after the discount retailer cut its annual same-store sales forecast. Peer Dollar Tree's shares also fell 2.0%.

Victoria's Secret & Co dropped 4.3% after the company forecast a decline in its third-quarter sales and missed its second-quarter results estimates.

(Reporting by Shristi Achar A and Amruta Khandekar in Bengaluru; additional reporting by Johann M Cherian Editing by Vinay Dwivedi)