GLOBAL MARKETS-Stocks rise but oil, European earnings worry

                                
 (Updates prices, adds Wall Street outlook)
                                
 By Jeremy Gaunt, European Investment Correspondent
                                
 LONDON, April 21 (Reuters) - Hopes that the worst of the
credit crisis is over boosted investor sentiment on Monday,
though mixed earnings reports hit European stocks and crude oil
<CLc1> at a record $117.40 a barrel set off inflation worries.
                                
 Globally, equities were trading at their highest since
mid-January and Wall Street looked likely to open flat after a
big jump on Friday.
                                
 Sentiment was boosted at the end of last week by U.S.
earnings resilience from internet leader Google <GOOG.O> and
heavy equipment maker Caterpillar <CAT.N> and fewer-than
expected writedowns from banking giant Citigroup <C.N>.
                                
 "Banks it seems are just figures in a cathartic Greek  
tragedy, on the road to redemption," Societe Generale said in a
note.
                                
 The Bank of England was also adding to investor confidence
with a plan to swap UK Treasury bills worth around 50 billion
pounds ($99.8 billion) for banks' riskier mortgage debt.
                                
 World stocks as measured by MSCI <.MIWD00000PUS> were up 0.6
percent at levels not seen since January 15. It has risen more
than 4 percent since its close last Monday.
                                
 Its emerging market stock counterpart <.MSCIEF> was up 1
percent on the day.
 In Europe, however, the FTSEurofirst 300 <.FTEU3> index was
down 0.8 percent, retreating after a rise of more than 2 percent
on Friday.
                                
 Losses in foods group Nestle <NESN.VX> and engineer
Schneider <SCHN.PA> offset a rise in drugmaker Novartis
<NOVN.VX>.
                                
 By 1104 GMT the pan-European FTSEurofirst 300 index <.FTEU3>
was down 1.15 percent at 1,310.61 points.
                                
 "What we see today is more a technical reaction to Friday's
rally. It's calming down now," said Stefan Thomas, fund manager
at Frankfurt Trust.
                                
  Earlier, Japan's Nikkei 225 benchmark <.N224> rose 1.6
percent to a nearly two-month closing high of 13,696.55, a gain
of 220.10 points. The broader TOPIX <.TOPX> closed up 2.1
percent at 1,331.51.
                                
 
                                
 DOLLAR SLIPS
                                
 The dollar fell against a basket of major currencies with
nerves about inflation pressures from the high oil price
outweighing the positive spin of the previous week.
                                
 "Markets were hoping to come in today with a slightly more
optimistic outlook for credit and risk appetite, but there's
residual nervousness with oil prices continuing to squeeze up,"
Rabobank markets strategist Jeremy Stretch said.
                                
 The dollar was down a quarter of a percent against a basket
of six major currencies <.DXY>. Against the yen it also fell 0.3
percent <JPY=> to 103.37 yen, having earlier closed in on 7-week
highs hit last week.
                                
 The euro gained 0.4 percent to 1.5880 <EUR=> but stayed well
below last week's record high of $1.5983.
                                
 Euro zone government bonds steadied after a sharp decline
last week.
                                
The two-year Schatz yield <EU2YT=RR> was flat at 3.815
percent while the 10-year Bund yield <EU10YT=RR> slipped 2.3
basis points to 4.115 percent.
                                
 Improving sentiment for riskier assets is adding pressure to
the safe-haven government debt market.