(Corrects direction of dollar vs yen in paragraph 12)
* Alcoa earnings help lift world stocks
* European shares up 0.7 percent, Japan loses 1.4 percent
* Yen, dollar retreat after recent gains
By Jeremy Gaunt, European Investment Correspondent
LONDON, July 9 (Reuters) - Forecast-beating results from
U.S. bellwether Alcoa <AA.N> helped lift European stocks and
draw global equities out of the red on Thursday, while currency
markets reversed some of their recent cautious patterns.
The U.S. aluminium giant kicked off the U.S. earnings season
on Wednesday by reporting a third consecutive quarterly loss,
but it beat estimates by a large margin due to cost cuts.
Stock markets have been hit over recent weeks as second
thoughts about the chances of a quick global economic recovery
have taken hold.
The corporate earnings reporting season is likely to
dominate bourses as it gets under way properly next week for
what it says about how companies are weathering the global
recession.
"There has been nothing reassuring in macro data lately, so
people are really hoping for good surprises on the earnings
front," said David Thebault, head of quantitative sales trading,
at Global Equities, in Paris.
World stocks as measured by MSCI <.MIWD00000PUS> were up
about a quarter of a percent, following seven consecutive
sessions of losses.
The FTSEurofirst 300 <> index of top European shares
was up 0.7 percent, bouncing back from a 10-week low hit on
Wednesday. Earlier, however, Japan's Nikkei <> closed down
1.4 percent on economic worries.
Investors were also eyeing a meeting of the Bank of England,
which was expected to keep interest rates on hold at a record
low of 0.5 percent but looked likely to expand its 125 billion
pound quantitative easing scheme to sustain attempts to lift
Britain out of recession.
SLOW RECOVERY
Foreign exchange traders reversed some of their previous
risk-aversion trades with Japan's yen falling after hitting a
five-month high against the dollar on Wednesday.
The dollar also dipped against currencies other than the
yen.
Sentiment was helped by a report from the International
Monetary Fund on Wednesday saying the global economy was slowly
starting to pull out of a deep recession, although the recovery
would be sluggish [].
The euro was up half a percent at $1.3952 <EUR=> and the
dollar gained against the yen <JPY=>.
Euro zone government bond futures retreated from two-month
highs hit in after-hours trade the previous session, tracking
moves in U.S. Treasuries which succumbed to profit-taking after
a sharp rally.
Treasuries shot higher, pushing 10-year yields to seven-week
lows, after an auction of 10-year paper attracted surprisingly
strong demand late on Wednesday. That gave Bunds a lift in after
hours trading, also prompting investors to book profits.
(Additional reporting by Blaise Robinson, editing by Mike
Peacock)
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http://blogs.reuters.com/globalinvesting; for the MacroScope
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