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Corporate results and US PCE inflation the week's focus

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Brent down 0.8%, gold off 2%

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FTSE 100 up 1.7%, STOXX 0.5%, S&P 500 futures up 0.6%

(Updates at 1200 GMT)

By Kevin Buckland and Alun John

TOKYO/LONDON, April 22 (Reuters) - World stocks

recovered some losses on Monday and gold fell by the most in a

year, dropping with government bond prices and oil as investors

reversed some defensive positions taken going into the weekend

on fears of a wider Middle East conflict.

The week ahead is packed with corporate earnings, with 158

companies in the S&P 500 and 173 companies in the STOXX 600

reporting first quarter results this week, according to data

from LSEG Workspace.

These include several big European banks, as well as U.S.

tech giants Microsoft and Alphabet, with the latter in

particular focus after chip maker Nvidia's 10% drop on Friday,

its biggest percentage fall in four years.

Crucial U.S. PCE inflation data, the Federal Reserve's

preferred gauge, due Friday, finishes off the week. After CPI

data earlier this month, markets currently see the first Fed

rate cut as most likely coming in September, though they are not

ruling out July.

"The big picture in equities is that they have been able to

digest this push back in rate expectations," said Karim Chedid,

Blackrock's chief investment strategist for iShares EMEA.

"Now earnings have to deliver for them to continue to do

well."

Ahead of all that, shares rose on Monday, with the STOXX 600

up 0.4% and S&P 500 futures 0.6% higher after

MSCI's broadest index of Asia Pacific shares outside Japan rose

0.87%. All fell on Friday.

London's commodities-heavy FTSE-100 rose around 1.66%

, the biggest gainer among large European benchmarks, and

neared an all-time high as tin and nickel rose to multi-month

peaks.

It was outpaced by a 2.3% gain for the Portuguese index

as oil company Galp Energia had a STOXX

600-topping 17% jump after saying a field off Namibia could

contain 10 bln barrels of oil.

In a further reversal of Friday's "risk off" mood, gold

dropped 2% to $2,341.9 an ounce, its biggest daily percentage

fall in over a year, though it is still not too far from its

April 12 record high of $2,431.29.

In recent weeks, investors have taken cautious positions on

Fridays, fearing an escalation in the conflict in the Middle

East over the weekend when markets are closed and they are

unable to trade.

"It seems neither Israel nor Iran want an escalation in the

crisis in the Middle East ... and with a subsequent strike from

either side not looking like it's coming, investor concerns have

eased somewhat," said Kazuo Kamitani, a strategist at Nomura

Securities.

However, Kamitani said expectations of later Federal Reserve

interest rate cuts and concerns about chip sector earnings will

continue to keep investors on their toes.

Iran said on Friday that it had no plan to retaliate

following an apparent Israeli drone attack within its borders,

which in turn followed an Iranian missile and drone attack on

Israel days before.

HAVEN OUTFLOWS

Bond yields - which climb when prices fall - rose back

toward multi-month highs.

The 10-year U.S. Treasury yield was last up 4

basis points to 4.66%, heading back toward the five-month peak

of 4.696% reached last week on the view that the Fed would be in

no hurry to ease policy amid robust economic data and sticky

inflation.

European yields also edged higher.

The dollar index, which measures the currency against

six major peers, rose 0.19% to 106.28. It was also at a

five-month top last week, at 106.51.

"As long as there is this uncertainty about the cutting

cycle particularly in the U.S, it's interesting for investors to

be in dollar longs because of its dual status as a high yielding

currency and also a defensive currency," said Yvan Berthoux, FX

strategist at UBS.

Crude oil fell as traders put the focus back on fundamentals

with a rise in U.S. stockpiles as the backdrop.

Brent futures fell 73 cents, or 0.84% to $85.56 a

barrel.