World stocks rebound from lows

LONDON (Reuters) - World stocks bounced off seven-week lows and Japan's yen weakened on Thursday in another burst of the risk-on, risk-off trading that has dominated financial markets this year.

MSCI's main gauge of global equities was up 0.6 percent after hitting its lowest level since July 7 on Wednesday. The Thomson Reuters global stock index was half a percent higher.

The global picture was helped along by strong corporate earnings in Europe, which boosted the FTSEurofirst 300 nearly 0.9 percent.

Both Credit Agricole and L'Oreal beat expectations.

"Companies have been reporting reasonable results," said David Buik, partner at BGC Partners. "But whether a rally can be sustained is to be seen, there is nothing to say the bad news is all over."

Throughout the northern hemisphere summer, markets have been balancing good corporate results with signs that growth in the world-leading U.S. economy is falling back.

But the performance of assets is also highly correlated, meaning that when investors move out of a riskier asset there is a boost to safer ones, and vice versa.

That could be seen on euro zone government debt markets on Thursday, where yields rose as investors moved out of bonds in conjunction with the rise in stocks.

Longer-dated German bond yields hit record lows on Wednesday after data showed new U.S. single-family home sales slid to the slowest pace on record in July and orders for costly durable goods were weak.

YEN EASES

One of the biggest risk-off trades, meanwhile, has been buying Japanese yen. It hit a 15-year high against the dollar

earlier this week.

On Thursday, the yen slipped further from its high as investors waited to see if Japanese authorities would go beyond just trying to talk down the currency.

"Investors are cautiously watching whether Japanese authorities will do something," said Hideki Amikura, deputy general manager of the forex section at Nomura Trust and Banking in Tokyo.

News that Bank of Japan Governor Masaaki Shirakawa will attend the Kansas City Federal Reserve conference in Jackson Hole, Wyoming, this week made some players hesitant to push the yen higher.

The dollar was under pressure following the poor U.S. data.

The dollar index, a gauge of the greenback's performance against a basket of six major currencies, fell 0.4 percent to 82.88. It hit 83.556 on Tuesday, a six-week high.

The euro rose around 0.6 percent on the day to a session high of $1.2746.

(Additional reporting by Naomi Tajitsu and Joanne Frearson)

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