By Sujata Rao
LONDON (Reuters) - World stocks marked a sixth straight day losses on Wednesday as fears about global economic growth kept sentiment fragile, with Wall Street tipped for a weak open and oil prices languishing near two-month lows.
European shares opened higher, taking a cue from Asia where MSCI's Asian ex-Japan index closed flat following a bounce in China where local media reported authorities were mulling allowing insurance firms to invest in equities.
A pan-European equity index rose 0.6 percent, after approaching two-year lows on Tuesday, shrugging off poor bank earnings, while MSCI's all-country index hovered just off flat after touching one-year lows.
Chinese shares closed 0.3 percent higher.
"We've got to accept that in this correction we have had 'on' and 'off' days' -- a few days back markets were buoyant on back of an announcement from China on fiscal, monetary and regulatory stimulus, then another day, there are earnings reports that are perceived by investors to be bad," said Andrew Milligan, head of global strategy at Aberdeen Standard Investments.
"But underlying it all are half a dozen issues that are worrying investors and none of them are going away soon."
Several factors have conspired to knock markets this week -- some earnings disappointment, a brewing conflict between Italy and the European Union over budget spending, criticism of oil power Saudi Arabia over the killing of a dissident journalist and finally, worries that world growth is losing steam.
Growth worries were highlighted by the International Monetary Fund (IMF), which recently cut economic forecasts, citing trade wars and capital flight from emerging markets. Latest European PMI surveys underscored that view, showing German private-sector growth at the slowest in three years.
There are also signs a burst of U.S. economic and earnings growth, fueled partly by tax cuts, may be waning -- Wall Street suffered heavy losses on Tuesday after some companies, including industrial giant Caterpillar which is seen as an economic growth bellwether, maintained or cut profit forecasts.
The shares pared losses towards close of trade and closed only half a percent lower but futures for all three New York indexes were 0.5-0.7 percent lower.
Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo, predicted "more bouts of mini-panic" until Nov. 6 U.S. midterm elections. But he added that "as last night's resilience by Wall Street shows, sentiment has not broken down completely."
Growth jitters also weighed on oil prices, with Brent around $76, almost $10 a barrel off recent highs following a 4 percent slide on Tuesday. But prices were also knocked by the prospect of more supply from Saudi Arabia which pledged to pump more crude quickly if needed. [O/R]
Saudi Arabia is also in the midst of a diplomatic storm surrounding the death of Jamal Khashoggi after Turkey dismissed the kingdom's efforts to blame it on rogue operatives while U.S. President Donald Trump said Riyadh staged the "worst cover-up ever."
However, Saudi equity markets have rebounded from recent lows and traded 0.2 percent higher thanks to strong company earnings.
On currency markets, the euro was undermined by purchasing manager surveys that showed slowing growth in manufacturing and new orders in Germany and France.
The single currency fell half a percent against the dollar while the greenback rebounded 0.3 percent versus a basket of currencies Sterling slipped 0.3 percent to a new 2-1/2 week low versus the dollar, trapped in a narrow range as uncertainty reigned over Britain's EU exit.
The lacklustre growth picture narrowed the gap between German 2-year and 10-year yields, in what is known a 'flattening' of the yield curve and a classic sign of growth worries.
(Reporting by Sujata Rao; Editing by Toby Chopra)
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