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European stocks trade higher, focus on earnings

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Oil prices fall, easing inflation worries

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U.S., Japan, Korea make currency statement

(Updates prices throughout, adds Wall Street futures)

By Elizabeth Howcroft

LONDON, April 18 (Reuters) - Global markets showed signs

of recovery on Thursday, with European stocks rising slightly

and the U.S. dollar pulling back from recent gains, while

finance chiefs of the U.S., Japan and Korea issued a rare

warning about currency weakness.

Stock markets sold off earlier this week, and Treasury

yields and the U.S. dollar surged to multi-month highs, after

investors were spooked by tensions in the Middle East after

Iran's missile and drone attack on Israel on April 13. Mixed

quarterly company earnings so far and recent comments from the

U.S. Federal Reserve, which dampened rate cut expectations, also

made investors more risk-averse.

The risk-off pullback showed signs of easing on Thursday.

Asian stocks made their biggest gains in a month and European

stocks opened higher, helped by more positive company earnings.

At 1208 GMT, the MSCI World Equity Index was up 0.2% on the

day, but still down 2% so far this week.

The pan-European STOXX 600 was flat on the day, having lost

its gains from earlier in the session, while London's

FTSE 100 was up 0.2%.

Wall Street futures were a touch higher, as chip stocks

rebounded. Nasdaq e-minis were up 0.2% and S&P 500

e-minis were up 0.2%.

Fiona Cincotta, senior markets analyst at City Index, said

that markets were being supported by a shift in focus away from

the Fed and towards upcoming earnings, including Netflix ( NFLX )

later on Thursday.

Comments from European Central Bank vice president Luis de

Guindos and an easing of oil prices have also helped support

sentiment in Europe, she added.

"There's still a little bit of optimism of lower rates, in

the euro zone, that's helping support European stocks," Cincotta

said.

Oil prices eased, with Brent futures down 0.7% at

$86.66 a barrel and U.S. West Texas Intermediate (WTI) crude

futures down 0.6% at $82.17 a barrel.

The two benchmarks slid 3% on Wednesday, in a move

attributed to signs that fuel demand is lower than expected this

year, amid flagging economic growth in China.

Lower oil prices can be seen as positive for stock markets

as they help contain inflation, improving the chances for

central bank interest rate cuts.

Analysts do not expect dramatic new sanctions on Iranian

oil, which accounts for about 3% of global output.

The U.S. dollar index was down by less than 0.1% at 105.9

and the euro was flat at $1.067275. The dollar

had surged in recent weeks, and is up 1.4% so far this month, in

its fourth consecutive month of gains. The index hit as high as

106.51 on Tuesday.

The United States, Japan and South Korea agreed to "consult

closely" on foreign exchange markets in their first trilateral

finance dialogue on Wednesday, acknowledging concerns from Tokyo

and Seoul over their currencies' recent sharp declines.

Analysts said the rare warning from the three countries'

finance chiefs may lay the groundwork for Japan to intervene in

the yen.

The dollar-yen pair was at 154.45, within sight of Tuesday's

154.79, which was the yen's weakest in 34 years.

U.S. Treasury yields were edging back up, with the 10-year

yield at 4.6059% and the 2-year yield at 4.9583%

.

In euro zone government bonds, the benchmark German 10-year

yield was flat at 2.471%.

Gold was a touch higher at 2,381.49.