NEW YORK, Aug 31 (Reuters) - A U.S. appeals court on Wednesday threw out a $655.5 million judgment against the Palestinian Authority and the Palestine Liberation Organization after they had been found liable to a group of American families who accused them of supporting terrorist attacks in Israel.

The 2nd U.S. Circuit Court of Appeals in New York said a lower court judge erred in concluding he had jurisdiction over the defendants with regard to the plaintiffs' claims. The appeals court ordered that the lawsuit be dismissed.

(Reporting by Jonathan Stempel in New York; Editing by Bill Trott) ((jon.stempel@thomsonreuters.com; +1 646 223 6317; Reuters Messaging: jon.stempel.thomsonreuters.com@reuters.net))