GLOBAL MARKETS-Economic worry, G20 caution reigns

                                
 * Stocks fall on economy worries
                                
 * G20 meeting in focus
                                
 * Dollar flat
                                
 
                                
 By Jeremy Gaunt, European Investment Correspondent
                                
 LONDON, June 25 (Reuters) - Worries about the fragility of
global economic recovery hit financial markets again on Friday,
knocking world stocks down for the fourth session in a row ahead
of a summit of Group of 20 nations.
                                
 Currency traders also sold higher-yielding currencies.
                                
 Investors have pulled back a bit from riskier assets this
week as evidence built that economic growth, particularly in the
United States, may be slowing.
                                
 This has combined with fears that the spending cuts and tax
rises being promulgated by European governments to cut debt will
hurt the recovery.
                                
 G8 leaders meeting on Friday in Canada -- turning into the
G20 on Saturday -- are set to grapple with this issue with
Washington warning against cutting too far and too fast.
                                
 "The cohesion generally evident among policymakers in
dealing with the global crisis is in danger of giving way to a
more divisive debate about how to manage the recovery," Credit
Agricole analysts said in a morning note to clients.
                                
 MSCI's all-country world index <.MIWD00000PUS> was down 0.2
percent, heading for a 2.7 percent weekly loss. Its emerging
market counterpart <.MSCIEF> was down 0.6 percent.
                                
 European shares were bucking the trend, however, with the
FTSEurofirst 300 <.FTEU3> up 0.3 percent after three days of
losses.
                                
 But the mood was still cautious.
                                
 "No one is really wanting to take any big positions ahead of
the G20," said Justin Urquhart Stewart, director at Seven
Investment Management.
                                
 Earlier, Japan's Nikkei average fell 1.9 percent.
                                
 
                                
 DOLLAR CALM
                                
 The dollar made little headway in subdued trade ahead of the
G20 leaders' summit and the yen held near the one-month highs it
hit against the U.S. currency on Thursday.
                                
 "It's a little bit of a strange situation as the euro should
usually suffer more in periods of risk aversion, but we are
seeing some position adjustments ahead of the G20," said Roberto
Mialich, currency strategist at Unicredit in Milan.
                                
 The euro was flat on the day at $1.2330 <EUR=>. The dollar
was flat against a basket of currencies <.DXY>.
                                
 Euro zone government bond yields were also flat.
(Additional reporting by Joanne Frearson and Tamawa Desai,
editing by Mike Peacock)