Stocks ease on earnings outlook, Greece worries

NEW YORK (Reuters) - Global equity markets eased on Thursday, knocked lower by concerns over Greece's new anti-bailout government and a mixed earnings season so far, while U.S. government bond yields rose on fresh signs of a strong American labor market.

Major Wall Street indices reversed early losses to rally as Boeing Co and Apple Inc extended gains fueled by strong earnings reports earlier this week.

Earlier, though, weak results hit European shares, with Royal Dutch Shell weighing on the market after it missed earnings expectations. The oil major, which fell 4.3 percent, said it would cut spending by $15 billion over three years due to slumping crude prices.

German bond yields initially fell as worries over Greece's new anti-bailout government buoyed demand for top-rated assets, but the yield on U.S. Treasuries rose after surprisingly strong weekly data on American jobless claims bolstered optimism.

"You have two things going on in equity markets, and both are negative right now. Greece is to some degree being underestimated as a potential problem," said Dan Morris, global investment strategist at asset manager TIAA-CREF.

"At the same time, generally speaking, you haven't had great earnings numbers out of the U.S. Guidance is going down, earnings estimates are coming down," Morris said.

Morris said calculated earnings growth for U.S. companies after stripping out Apple's blowout numbers this week is about 2 percent, which isn't very good. The overall growth rate is 7 percent, but a huge chunk of that is Apple, he said.

MSCI's all-country world stock index , a measure of stock performance in 45 countries, fell 0.62 percent. The FTSEurofirst 300 index of top European shares closed down 0.12 percent at 1,473.19 points.

On Wall Street, the Dow Jones industrial average rose 135.27 points, or 0.79 percent, to 17,326.64. The S&P 500 gained 9.91 points, or 0.49 percent, to 2,012.07 and the Nasdaq Composite added 18.44 points, or 0.4 percent, to 4,656.43.

The benchmark S&P 500 is trading just north of a critical technical support level at 1,991, with the release Friday of fourth-quarter U.S. gross domestic product an key indicator of the market's direction, said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

"We get a big number tomorrow, in terms of GDP. That's going to make or break where this market is going," Mendelsohn said.

A Reuters poll shows expectations of 3.0 percent growth in GDP.

Greece endured a fourth day of market jitters after Sunday's election with its newly installed government at loggerheads with international creditors as it begins to roll back austerity measures imposed in its bailout deal.

Yields on German 10-year bund , the euro zone benchmark, fell in early trade but closed slightly higher at 0.357 percent.

Yields on U.S. 10-year government bonds rose to 1.7478 percent, with the price falling 6/32.

The 10-year British gilt yield dropped below 1.4 percent for the first time, breaking a record that had held even during the depths of the euro zone debt crisis in July 2012.

Gilt yields fell on the U.S. Federal Reserve's promise to be patient before it raises interest rates and on uncertainty about Greece's new government.

U.S. crude oil futures turned negative after a report from oil services firm Genscape showed further inventory builds in energy hub Cushing, Oklahoma.

U.S. crude fell 7 cents to $44.38 a barrel.

Brent steadied just above break-even, up 40 cents at $48.87 a barrel.

Switzerland's franc again dominated trade on major currency markets, weakening against the euro and dollar amid renewed speculation of intervention by the Swiss National Bank, while commodity-based currencies fell against the greenback.

The franc sank to 1.0430 francs per euro in morning trade in Europe , by far its weakest since the SNB triggered the most violent move in a major currency in four decades by dumping its cap on the franc two weeks ago.

Against the dollar, the euro was last up 0.2 percent at $1.1309. The dollar rose against the Japanese yen 0.76 percent to 118.42.

(Reporting by Herbert Lash; Editing by Christian Plumb)