* World stocks make small gains
* Mixed China, U.S. data weighs
* Dollar, yen gain on caution
By Jeremy Gaunt, European Investment Correspondent
LONDON, April 16 (Reuters) - World stocks eked out small
gains on Thursday as mixed data from China and the United States
reminded investors of the fragility of rebounding economies and
markets.
The Japanese yen rebounded in a shift from higher-yielding
currencies.
A day after a mixed set of economic data from the United
States, it was China's turn, saying its economy grew more slowly
than expected in the first quarter, but also showing
improvements in March, providing tentative signs that the worst
may be behind.
On Wednesday, data showed U.S. consumer prices in March
posted their first 12-month drop in nearly 54 years, while
industrial production slipped further.
However, also on Wednesday, the Federal Reserve said
economic activity in some parts appeared to be stabilising,
while other data showed that a decline in factory activity in
New York state eased this month.
After an impressive month-long rally in global equities
investors still appear conflicted between seeing glimmers of
hope that a global economic downturn is showing signs of easing
and other indicators that point to more pain ahead.
It was summed up by a Morgan Stanley note:
"We see green shoots of recovery and expect global growth to
resume in (the second half of 2009). The Great Recession still
has a way to go and the recovery is not likely to be V-shaped."
MSCI's all-country world stock index <.MIWD00000PUS> was up
around 0.1 percent, but still on track for a sixth consecutive
week of gains. It has gained 27 percent since hitting a low on
March 9.
European shares were flat to higher with banks gaining ahead
of JPMorgan <JPM.N> figures due later.
The pan-European FTSEurofirst 300 <> index of top
shares was up less than 0.1 percent.
Earlier, Japan's Nikkei stock average <> trimmed gains
to 0.1 percent after the China data.
It clung to gains of 12.30 points at 8,755.26 after earlier
touching 9,030.00, one of several recent failed efforts to break
significantly above 9,000.
DOLLAR RISES
The yen and dollar rose against other major currencies on
the mixed economic data pushed investors towards perceived safer
assets.
"Investors are reassessing whether a recent rally in risk
assets is sustainable and if a economic recovery is taking
place," said Lee Hardman, currency economist at Bank of
Tokyo-Mitsubishi UFJ.
The yen was up 0.7 percent against the dollar at 98.64 yen
<JPY=>, while it was up 1.1 percent against the euro at 129.79
yen <EURJPY=>.
The dollar was up 0.2 percent against a basket of currencies
<.DXY>.
Euro zone government bond prices fell. Ten-year yields
<EU10YT=RR> were 3 basis points higher at 3.183 percent.
Two-year bond yields <EU2YT=RR> were 2 basis points higher at
1.375 percent.
(Additional reporting by Rafael Nam and Tamawa Desai; Editing
by Andy Bruce)
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