World stocks hovered around flat on Thursday despite strong Chinese growth data that provided reassurance on the global economy as investors braced for the spate of U.S. and European corporate results due this week.

As the mood turned cautious, the yen and the dollar rose and U.S. Treasuries ticked higher, while oil prices were steady around $61 a barrel following a 3 percent rise in the previous session.

Three days of strong risk appetite this week have pushed up global equities <.SPX> 6 percent and fueled gains in oil, commodities and emerging markets while the VIX volatility index <.VIX> -- Wall Street's fear gauge -- dropped to levels last seen in September 2008.

Better-than-expected results from companies like Goldman Sachs and Intel added to investors' optimism over the global economic recovery this week but with a spate of earnings still to come -- including banking giants JP Morgan and Citigroup and tech firms IBM and Google -- nervousness is building.

By 0850 GMT the FTSEurofirst 300 <.FTEU3> index of top European shares was flat, its performance mirrored by London's FTSE100 <.FTSE>, Germany's DAX <.GDAXI> and France's CAC-40 <.FCHI>.

The market needs to see that recovery is there and that earnings have bottomed, said Bernard McAlinden, investment strategist at NCB Stockbrokers in Dublin.

So far we are getting indications of better-than-expected Q2 earnings season, although it's very early.

The mood has faltered slightly after a jump in Asian shares which saw Tokyo markets <.N225> hit a one-week high before paring gains while other Asian shares powered to a month-high with a rise of over 1 percent before coming off <.MIAP00000PUS>.

Markets were buoyed early in the session by China's second quarter gross domestic product which rose 7.9 percent against the previous year, beating forecasts for a 7.5 percent rise.

The world's third-largest economy also grew 7.1 percent in the first half versus a year earlier.

Coming on top of better-than-expected U.S. data and corporate results, the news suggested to investors that the recession is abating. But trepidation about the upcoming results kept a lid on market gains.

We're seeing a bit of profit-taking in risk assets after a few days of gains on stock markets, said Elisabeth Andreew, currency strategist at Nordea in Copenhagen.

There is a concern that a lot of the positive news may already be priced in and also nervousness ahead of some big U.S. companies reporting earnings, she said, adding that currency markets were taking their cue from equities.

By 0758 GMT the dollar had fallen 0.5 percent against the yen to 93.73 yen while the euro was down 0.6 percent to 132.19 yen. Against the dollar, the euro fell 0.1 percent to $1.4096.


The day's loser was the New Zealand dollar.

Fitch sent a sobering message to global markets, cutting the outlook on New Zealand's 'AA-plus' rating to negative, citing the country's high debt levels and pushing the NZ dollar down 1.2 percent to $0.6413.

This was a bit of a surprise. It may refocus attention on concerns about sovereign risk that had been receding for a while, said Masafumi Yamamoto, head of FX strategy Japan at Royal Bank of Scotland, referring to sovereign ratings in general.

Markets are also keeping a wary eye on the fate of CIT Group Inc , a U.S. lender to thousands of small and mid-sized businesses, after bailout talks with the government ended, a move that could drive it to bankruptcy.

U.S. Treasuries, benefiting from the renewed demand for less risky assets, with 10-year yields at 3.5747 percent, down nearly four basis points from U.S. trade but up from a two-month low of 3.26 percent hit on Monday.

Corporate results apart, markets are also waiting for weekly U.S. jobless claims to see how the employment picture is shaping up in the world's biggest economy.

(Additional reporting by Elaine Lies in Tokyo, Jessica Mortimer and Brian Gorman in London)

(Reporting by Sujata Rao)