World stocks hit 10-month highs for a second day running on Friday following upbeat growth data from the euro zone, but a fall in Chinese stocks and caution over the ongoing U.S. earnings season tempered gains.

Most stock markets got a leg-up after Germany and France, the euro zone's two biggest economies, reported 0.3 percent second-quarter growth on Thursday, ending their recessions earlier than expected.

However, Chinese stocks <.SSEC> slid 3 percent to their lowest close in six weeks and posted their biggest weekly drop in five months on Friday, with worries about additional share supplies from IPOs adding to concern over monetary policy and bank lending.

A continuation of the weak Shanghai A share index overnight has raised the call from doves for the potential for another leg down in Western stock markets, said analysts at Westpac in a client note.

If the current trajectory follows that of the first leg of the Great Depression, the S&P 500 could be 12 percent lower within a month.

The MSCI world index <.MIWD00000PUS> hit its highest since Oct 2008 before trimming gains to 273.04, up 0.21 percent from the U.S. close.

The pan-European FTSEurofirst 300 <.FTEU3> index of top shares was up 0.27 percent, holding off the previous session's nine-month high.

U.S. stock futures were indicating a slightly lower open on Wall Street ahead of U.S. data and company earnings, after getting a lift on Thursday from better than expected earnings from Wal-Mart Stores Inc , the world's largest retailer.

World stocks have rallied more than 2 percent in the past three days, after the U.S. Federal Reserve said this week the U.S. economy was showing signs of leveling out and it moved to phase out one emergency measure.

There's still an ongoing reaction to Wednesday's statement from the Fed that the economy is stabilizing, said Bernard McAlinden, investment strategist at NCB Stockbrokers in Dublin.

Oil prices rose for the third consecutive day, and were up 0.38 percent at $70.79 a barrel.

However, losses in Chinese shares were hampering higher-risk markets. Emerging stocks <.MSCIEF> rose 0.3 percent, but held below recent 11-month highs.

The yen rose against the euro and dollar, its safe-haven status boosted by the Chinese stock losses.

The yen gained around 0.40 percent against the dollar to 95.02 after earlier hitting an eight-day high, and also climbed 0.40 percent against the euro to 135.80.

The euro was steady against the dollar at $1.4288. Euro zone government bond futures hit a one-week high, tracking U.S. Treasuries after a well-received 30-year U.S. Treasury auction on Thursday. The September Bund future was up 38 ticks.

(Additional reporting by Brian Gorman in London; Editing by Victoria Main)