* World equities rise, helped by upbeat company results
* Greek, U.S. debt woes weigh; European yields rise
* Weaker dollar propels gold to record high; oil rises
* China warns on inflation dangers, forex reserves
(Updates market action, adds fresh quote)
By Richard Leong
NEW YORK, April 19 (Reuters) - World stocks rose on
Tuesday, recouping the prior day's losses, but nagging debt
worries on both sides of the Atlantic and new signals of
inflation dangers in China curbed appetite for risk.
A weaker dollar propelled gold <XAU=> to a record peak near
$1,500 an ounce and oil in New York <CLc1> above $108 a
barrel.
Investors dipped their toes back into stocks and other risk
assets in part on solid company results, a day after Standard &
Poor's jolted markets when the debt rating agency warned that
political gridlock in Washington is impeding work on paring the
huge federal debt load.
Speculation about a Greek debt restructuring as early as
this summer has also crimped investor sentiment.
"We are getting a tug-of-war between the macros and micros.
We are in the middle of the earnings season with these macro
shocks," said Brett Hryb, senior portfolio manager at Manulife
Asset Management in Toronto.
MSCI's all-country world stock index <.MIWD00000PUS> rose
0.6 percent, retracing some of Monday's 1.6 percent loss, which
was the biggest one-day drop in a month.
Wall Street stocks <> <.SPX> <> rose 0.4 percent
in choppy trading. Better-than-expected results from investment
bank Goldman Sachs <GS.N> and healthcare company Johnson &
Johnson <JNJ.N> stoked bids for U.S. shares after they fell
more than 1 percent on Monday on sovereign debt worries. []
Solid earnings from luxury goods makers LVMH <LVMH.PA> and
Burberry <BRBY.L> spurred a 0.4 percent rise in European stocks
<> after a 2 percent drop on Monday.
Japan's Nikkei <> closed down nearly 1.3 percent in
the wake of the prior day's losses in the United States and
Europe.
Investor unease persisted over a possible Greek debt
restructuring that could further strain the euro zone.
Greece sold 1.6 billion euros of three-month debt but was
forced to pay a yield of more than 4 percent, more than
quadruple what Germany -- the euro zone's strongest member --
pays on similar obligations.
DOLLAR FALLS
Standard & Poor's rattled investor confidence on Monday
when it changed its outlook on the United States to negative
from stable, threatening the future of the prized AAA credit
rating for the world's top economy.
In currency trading on Tuesday, the U.S. dollar slipped 0.6
percent against a basket of major currencies <.DXY> after
making headway the previous day.
Monday's dollar gains came on a rush for safe havens
despite the risk of S&P downgrading U.S. debt in two years if
Washington fails to achieve a budget plan that relies less on
debt.
S&P's warning intensified scrutiny of the U.S. budget
deficit and the political fight to slash it. The deficit is a
key element in the global imbalances that currently worry many
investors and policymakers.
There was no direct reaction to the S&P move on Tuesday
from Beijing, which holds vast reserves of U.S. Treasuries.
However, the head of China's central bank said the country
should diversify investments as its some $3 trillion of foreign
exchange holdings had grown too large.
Another Chinese rate setter said inflation pressures gave
further scope for a rise in banks' reserve requirements
following seven increases -- together with four raises in
benchmark interest rates -- since October.
The euro recovered from the previous day's sell-off, helped
by encouraging economic data. []
The single currency rose 0.6 percent to $1.4337 <EUR=>.
Overall, it has pulled back sharply, having hovered at a
15-month high around $1.4520 for the past week. See []
Lingering worries over the cost to bail out peripheral
countries exerted pressure on the European debt market, which
lagged U.S. Treasuries. Ten-year Greek bond yields
<GR10YT=TWEB> were last up 17 basis points at a euro-era high
of 14.815 percent, while German Bund futures <FGBLc1> fell 0.3
percent to 122.10.
The benchhmark U.S. 10-year note's yield <US10YT=RR>
slipped 2 basis points to 3.36 percent, its lowest in three
weeks.
(Additional reporting by Rodrigo Campos, Wanfeng Zhou, Chris
Reese, Robert Gibbons and Frank Tang in New York; Editing by
Jonathan Oatis)
