GLOBAL MARKETS-Shares pare gains as corporate earnings mixed

                                
 * Global stocks pare gains after hitting one-month highs
                                
 * Euro zone government bond yields edge up
                                
 * Dollar rises, commodities weaken
                                
 
                                
 By Atul Prakash
                                
 LONDON, July 17 (Reuters) - Global equities pared gains on
Friday after hitting a one-month high as mixed earnings from
major U.S. companies including General Electric <GE.N> and Bank
of America <BAC.N> forced investors to trade cautiously.
                                
 The market was digesting results from Citigroup <C.N>, the
embattled banking giant scrambling to survive the financial
crisis, as it reported a second-quarter profit driven by gains
on its Smith Barney deal. [ID:nN17470666]
                                
 But its primary banking businesses continued to suffer
rising credit losses. Stripping out the one-off gain from the
brokerage venture, Citigroup had a loss of 26 cents a share,
narrower than analysts' consensus forecast of a 31 cent loss,
according to Reuters Estimates.
                                
 The results followed reassuring figures earlier this week
from JPMorgan <JPM.N>, Goldman Sachs <GS.N> and Intel <INTC.O>.
                                
 MSCI's global equities index <.MIWD00000PUS>, which has
gained 6 percent so far this week on earnings results, was up
0.2 percent after hitting its highest since mid-June, while Wall
Street looked set for a cautious start.
                                
 European shares also cut gains. The FTSEurofirst 300
<.FTEU3> index of top shares was up 0.3 percent, while Britain's
FTSE100 <.FTSE>, Germany's DAX <.GDAXI> and France's CAC <.FCHI>
rose between 0.4 percent and 0.6 percent.
                                
 "For both Bank of America and Citi, it is kind of a mixed
bag," said Walter Todd, portfolio manager at Greenwood Capital
Associates in South Carolina.
                                
 "They both seem to reserve a lot for credit losses in all
parts of the business. That's the bad news. The good news is the
bank earnings looked really strong, which should be the case."
                                
  Bank of America <BAC.N> posted a lower quarterly profit, as
core results were hurt by a surge in troubled loans as more
credit card and mortgage customers fell behind on payments.
                                
 General Electric <GE.N> reported a sharply lower quarterly
profit and missed Wall Street's revenue targets on weakness at
its finance and NBC media businesses.
                                
 
                                
 CAUTIOUS APPROACH 
                                
 Some analysts said that it was too early to be overly
optimistic about the global economy as data was still ringing
warning bells and some companies face a liquidity crunch.
                                
 "The market is looking for good news and it is interpreting
everything as good news. Whether it is interpreting it
correctly, I am not too sure," said Justin Urquhart Stewart,
director at Seven Investment Management.
                                
 A survey showed on Thursday that factory activity in the
U.S. Mid-Atlantic region contracted for a 10th consecutive month
in July, posting a worse than expected decline. [ID:nN16411053]
                                
 But on a brighter note, new U.S. housing starts and permits
jumped more than expected in June. [ID:nN16425610]
                                
 CIT Group Inc <CIT.N> was in discussions on Thursday with
potential lenders to secure financing, after the collapse of
rescue talks with the government left the 101-year-old U.S.
lender to hundreds of thousands of small and medium-sized
businesses on the brink of bankruptcy. [ID:nN16442670]
                                
 Euro zone government bond yields climbed in choppy trade,
but worries about the possible bankruptcy of CIT Group and bomb
blasts in Indonesia provided some support for the bond market.
                                
 "There's always a knee-jerk reaction to geopolitical events
and there's some worry on news about CIT's pending bankruptcy,
said Nick Stamenkovic, a strategist at RIA Capital Markets.
                                
 However, the dollar and the yen were firmer against other
major currencies, reflecting caution about corporate earnings.
The euro was down 0.5 percent at $1.4077 <EUR=> and down 0.4
percent at 132.17 yen <EURJPY=>.
                                
 "Currencies are very much driven by sentiment on equity
markets at the moment, which is difficult to predict, but the
current uncertainty is helping the dollar higher," said Brown
Brothers Harriman currency strategist Audrey Childe-Freeman.
                                
 A rise in the dollar pressured oil <CLc1> and gold <XAU=>,
as a firmer U.S. currency made the dollar-priced commodities
costlier for other currency holders. Copper <MCU3> was down on a
rise in metal stocks at the London Metal Exchange warehouses.
 (Additional reporting by Emelia Sithole-Matarise, Brian Gorman,
Jessica Mortimer, Dominic Lau and Tamawa Desai)
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