World stocks fell on Tuesday as investors digested early results from the U.S. and European earnings seasons while the dollar climbed on a Chinese view its decline has hit bottom.

Some attention was also likely to be paid to euro zone member Greece, reeling from a huge debt burden and downgrade, which was to auction T-bills later in the day.

MSCI's all country world stock index <.MIWD00000PUS> was down 0.3 percent and Europe's FTSEurofirst 300 <.FTEU3> lost 0.5 percent.

Earlier, however, Japan's Nikkei <.N225> hit a new 15-month closing high, buoyed by China's reporting record imports of some commodities and stronger-than-expected exports.

Earnings season was a key focus for many investors. U.S. aluminum producer Alcoa Inc , the first Dow Jones industrial average <.DJI> component to announce results, reported earnings below Wall Street estimates after the closing bell on Monday.

Many are now worried that the early miss by Alcoa could be the theme of what is likely to be a fairly mixed and crucial earnings season, said James Hughes, market analyst at CMC Markets.

Underlining the potential for a mixed picture, the world's fourth largest retailer, Tesco , smashed Christmas sales growth forecasts in its main British market.

Investors have generally carried last year's risk rally through into 2010, given the continuing improvement in the global economy and the momentum from low interest rates and government stimulus plans.

BOTTOM DOLLAR? The dollar gained on comments from Peng Junming, an official at China's $300 billion sovereign wealth fund CIC, that the dollar had hit bottom and had limited room to fall further, while the yen would continue to weaken.

The dollar was up 0.2 percent against a basket of currencies <.DXY> but was weaker against the euro at $1.4483.

On debt markets, euro zone government bond prices were higher.

Greece was likely to be closely watched as it was holding a 1.6 billion euro auction of 6- and 12-month T-bills.

Much of this kind of debt is usually taken up by domestic buyers, but given Greece's debt problems and worries about the euro zone's so-called peripheral economies, the auction could be something of a test.

Greek Finance Minister George Papaconstantinou told Reuters on Monday he did not expect any difficulties with the auction.

(Additional reporting by Simon Flush; editing by Stephen Nisbet)