Global stocks and the oil price dipped on Thursday as disappointing data continued to temper risk appetite and analysts said the effect of a potential accord to release oil reserves would take time to filter through to the broader economy.

In Europe, shares .FTEU3 fell to a three-week low and peripheral euro zone bond yields rose as investors unloaded Italian debt after an auction and braced for a tough budget from Spain on Friday that could make it harder for the country to return to growth.

Wall Street was seen stabilizing after falling on Wednesday.

Brent crude slipped below $124 a barrel after falling more than 1 percent on Wednesday on a surge in U.S. crude inventories and on talks between Western nations on releasing strategic oil reserves.

A more than 15 percent rise in Brent this quarter risks choking economic growth and a French news report said there could be a reserve release within weeks. But Sarah Hewin, senior economist at Standard Chartered Bank in London, cautioned that it would take time for the extra supply to affect the global economy.

It would offer some relief, and a pullback in oil prices, but like the European Central Bank's long-term financing operations, there will be some time lag before it affects the broader economy, said Hewin.

Reduced risk appetite supported the yen against the dollar although traders said the Japanese currency would soon come under renewed pressure as buying linked to the end of the Japanese financial year would peter out.

The euro slid 0.2 percent versus the dollar to $1.32934 and was unnerved by the OECD which said euro zone economies were falling far behind the United States and Canada, advising central banks to keep easy money flowing to provide support.

MSCI's main global stock index .MIWD00000PUS, which hit an eight-month high earlier this week, was down 0.4 percent.

Shares in Tokyo, which hit a one-year high on Tuesday, slipped 0.9 percent, but still looked set for their best January-March quarter in 24 years. .T

Profit taking ahead of the end of the first quarter has added to the pullback in stocks in the past few days but analysts said that should be waning.

Mining shares rallied in Europe but energy stocks took a beating and Swedish retailer Hennes & Mauritz (HMb.ST), the world's second-largest fashion retailer, skidded 4.9 percent, on disappointing quarterly profits, pushing the European retail sector down 1.5 percent .SXRP.

French oil company Total (TOTF.PA) fell 2 percent in Paris, extending losses this week to more than 8 percent in the wake of a gas leak in the North Sea.

CHINA WORRIES

Markets are likely to continue to suffer sharp swings in risk appetite on mixed economic data from the United States and China and continuing concerns about the euro zone's debt problems and its economic outlook.

Data on Wednesday showing new orders for long-lasting U.S. factory goods increased only modestly in February, supported the view that U.S. economic growth in the first quarter could be lacklustre.

Early in the year markets were lifted by U.S. data. What we are seeing now is a reality check, said Hewin. In all three major blocks, economic momentum is weak.

Access to credit continues to weigh on European economies. Data on Wednesday showed banks cut lending to euro zone companies in February, suggesting the flood of cash pumped out by the European Central Bank since last year has yet to bolster flagging businesses in the wider economy.

European Union finance ministers will seek on Friday to calm some of investors' worst fears by discussing how to strengthen the euro zone's defenses against the spread of the debt crisis, but lasting relief in the market was unlikely.

Most of this good news already seems to be in the price and investors may need to see much better macro data to revive the upward momentum in risk assets, Lloyds Bank strategists said in a note.

Italy drew healthy demand at a bond auction but yields later rose, reflecting still jittery sentiment on the euro zone's ability to overcome its debt crisis as Spain staged a general strike and braced for further austerity measures in Friday's budget.

Commodities have been knocked by worries that China's economic slowdown is hurting corporate profits more than anticipated. Those fears rattled China's stock markets on Thursday and sent the Australian dollar down 0.6 percent against the safe-haven yen although some analysts said those fears were being overplayed.

With the Chinese stock markets under pressure, the outlook on AUD will unlikely turnaround until we see some confirmation that the Chinese economy is not weakening too much and which should be affirmed by the release of the Chinese PMI (on Sunday), said analysts at BNP Paribas.

Copper, which has rallied 10 percent this year, was steady after shedding more than 2 percent on Wednesday. Three-month copper was trading at $8,347 a metric ton in London trade. It has struggled to make headway above the $8,700 mark because of slack demand from top consumer China.