World stocks put in modest gains on Wednesday after recent declines, while oil prices also rebounded as investors sought fresh opportunities to bet on risky assets.

The Japanese yen fell after a brief show of strength in the previous session. The government downgraded its assessment of the economy for the first time in six months to reflect last month's devastating earthquake and tsunami and their aftermath.

Brent crude oil rebounded to above $122, halting a two-day decline, on fears that the Libya conflict could settle into a bloody stalemate, while a sudden disruption in Kuwaiti oil exports due to bad weather boosted sentiment.

Overall, Wednesday was mostly a mirror image of Tuesday, reflecting investors' current tendency to be risk-on one day and risk-off the next.

Surveys suggest that investors are willing to take riskier bets at the moment but are being constrained by concerns that growth in the global economy is vulnerable.

The overriding theme at the moment is that the data we're seeing simply isn't conducive to building much confidence in the market, said Cameron Peacock, analyst at IG Markets.

World stocks as measured by MSCI <.MIWD00000PUS> were up a quarter of a percent for a 4.2 percent year-to-date gain. Much of the drive came from emerging markets <.MSCIEF>, which gained two thirds of a percent.

Emerging markets have returned to favor in the past few weeks after a hiatus.

Japan's Nikkei <.N225> rose 0.9 percent on the day in thin volume. Analysts suggested the full impact of the country's disasters, as outlined in the government's new assessment, was still not clear.

A Bank of America-Merrill Lynch fund manager poll on Tuesday showed investors rapidly cutting their exposure to Japanese equities, although some big firms have been buying.

In Europe, the FTSEurofirst 300 <.FTEU3> rose a quarter of a percent, rebounding from its biggest one-day fall in a month on Tuesday.

YEN WEAKER The yen slipped broadly while the euro edged back toward a 15-month high against the dollar.

The prospect of further interest rate rises by the European Central Bank while monetary policy stays loose in the U.S. and Japan continued to buoy the single currency, leaving it just shy of a 15-month high of $1.4520.

The dollar was up 0.5 percent at 84.01 yen after sliding more than 1.2 percent on Tuesday for its biggest one-day percentage drop in four months.

If there is no pullback in oil and other commodity prices then I think going forward the yen will be very vulnerable, said Niels Christensen, currency strategist at Nordea in Copenhagen.

On European bond markets, Bund futures handed back some of the gains from a rally in the previous session as investor appetite for risk rose and debt markets eyed a German auction of ultra-long paper.

(Additional reporting by Jessica Mortimer and Atul Prakash; Editing by John Stonestreet)