* Wall Street set for positive start, lifts Europe 1 percent
* Emerging stocks fall 1.7 percent
* Oil briefly dips below $59 barrel, the rises above $60.50
By Jeremy Gaunt, European Investment Correspondent
LONDON, July 13 (Reuters) - European shares reversed course
on Monday and headed higher as Wall Street looked set for a
positive start, although world shares were lower with
particularly heavy losses in emerging markets.
Investors in general fretted about a coming wave of
corporate earnings and confidence in a rapid global economic
recovery faded, epitomised by oil dipped briefly below $59 a
barrel.
But crude rallied later, however, stand above $60.50. <CLc1>
"I don't think we will see an economic recovery this year
and ... earnings estimates are still too high, so there is room
for disappointment," said Philippe Gijsels, senior equity
strategist at Fortis Bank, in Brussels.
World stocks as measured by MSCI <.MIWD00000PUS> lost close
to 0.2 percent, off earlier losses of three quarters of a
percent. The FTSEurofirst 300 <> index of top European
shares also rose more than 1 percent, but only after hitting an
11-week low.
European sentiment was lifted as the oil price turned
around. Dutch conglomerate Philips Electronics <PHG.AS> earlier
surprised the market with a return to profit in the second
quarter and said it was hopeful of an upturn in business in the
second half of 2009.
Emerging markets suffered more acutely, taking the MSCI
sector index <.MSCIEF> down 1.7 percent. The sector has been the
big winner as investors have banked on a recovering economy, so
would likely unwind quicker if a major correction set in.
So far in the U.S. earnings season, two major U.S. companies
had reported, giving investors mixed signals. Bellwether Alcoa
<AA.N> posted a third consecutive quarterly loss, but beat
estimates; oil major Chevron <CVX.N> warned that second-quarter
earnings would be hit by a decline in U.S. refining margins.
Among U.S. companies reporting this week are Goldman Sachs
<GS.N>, JP Morgan <JPM.N>, Bank of America <BAC.N>, Citi <C.N>,
IBM <IBM.N>, Google <GOOG.O>, Intel <INTC.O> and GE <GE.N>.
European reports will come from Nokia <NOK1V.HE>, Alstom
<ALSO.PA>, Novartis <NOVN.VX> and Pernod Ricard <PERP.PA>.
YEN RISES
The yen rose broadly, hitting a five-month high against the
dollar and an eight-week peak against the Australian dollar as
concern over upcoming U.S. corporate earnings heightened
investors' aversion to risk.
Commodity-based currencies, particularly the Australian and
New Zealand dollars, were hit hard by the falling oil price.
"Risk aversion trades are coming back into the market again
and the yen is the main currency to benefit from that," CMC
Markets analyst James Hughes said.
"This week there is heavy focus on the U.S. earnings seasons
and investors will want to see that any recovery for major
companies is revenue-based and not cost-cutting based," he added.
The dollar hit a five-month low against the yen of 91.73 yen
on electronic trading platform EBS. It was later down only
slightly at 92.45 yen <JPY=>.
The euro edged up 0.3 percent against the dollar at $1.397
<EUR=>.
On euro zone government bond markets, the interest
rate-sensitive two-year Schatz yield <EU2YT=RR> was steady at
1.216 percent.
(Additional reporting by Atul Prakash and Jessica Mortimer;
Editing by Victoria Main)
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