* U.S. dollar under pressure
* U.S. futures recover after heavy losses on Tuesday
* Asian stock markets: tmsnrt.rs/2zpUAr4
* FT report on U.S.-China talks rekindle trade worries
* Data from U.S., Japan and Canada miss forecasts
* For Reuters Live Markets blog on European and UK stock markets please click on:
By Josephine Mason
LONDON, Jan 23 (Reuters) - Global markets recovered from earlier losses on Wednesday as investors made a cautious return to riskier assets, with U.S. futures and European stocks higher even as worries about corporate and economic growth lingered.
Trading was choppy as hopes of more stimulus measures from China to shore up its economy offset worries over progress between Washington and Beijing in resolving their trade spat.
The MSCI world equity index, which tracks shares in 47 countries, was back in positive territory around midday in London.
U.S. futures pointed to a positive start for Wall Street after the heaviest losses in nearly three weeks in the wake of disappointing earnings.
Pan-European stocks were up 0.4 percent at 1322 GMT.
The main driver of the earlier risk-off tone was a Financial Times report that Washington had rejected an offer from Beijing for preparatory trade talks this week ahead of high-level negotiations scheduled for next week.
"Even though the Trump administration later denied the report, the damage had been done to sentiment," said Edward Park, deputy chief investment officer at Brooks MacDonald.
A thawing in U.S.-China trade tensions has fuelled a rally in stocks through much of January, also supported by a more dovish-sounding Federal Reserve.
A fresh batch of weak corporate updates from European companies including luxury goods brand Burberry and Ingenico knocked confidence about fourth-quarter earnings.
"If earnings come in reasonably around expectations, the reality is equities are attractively valued across global regions," said James Bateman, chief investment officer of multi asset at Fidelity International.
"If they disappoint consistently there is going to be a real reappraisal of fair value."
European companies are expected to report an average 4.8 percent rise in earnings per share (EPS) in the fourth quarter, a decrease from the 6 percent expected last week, according to I/B/E/S Refinitiv.
Most euro zone bond yields fell after the Bank of Japan set the tone for further easing by warning of rising risks to its economy ahead of Thursday's European Central Bank meeting.
Markets expect the ECB to acknowledge growing threats to the euro zone economy. The dollar was lower against a basket of other currencies.
Justin Onuekwusi, a fund manager at Legal & General said central banks' unwinding of stimulus, China's slowdown, the broader impact of trade wars and populist rhetoric from politicians were keeping markets on edge.
"All these issues have an impact ... Every time you have an increase in rhetoric, markets react. It feels like there is a greater political risk premium.
"The biggest near-term risk is that as you see markets fall, confidence drops and you get people not spending which becomes self-perpetuating. The near-term probability of that has increased."
Recent data has pointed to a rough year ahead for the world economy.
U.S. home sales tumbled 6.4 percent in December to their lowest in three years. Compared with a year earlier, they were down more than 10 percent for the first time since 2011.
House price increases slowed sharply, adding to evidence of a further loss of momentum in the housing market.
Canadian factory sales and wholesale trade both slumped more than expected in November, while in Germany a survey by the ZEW research institute showed morale among German investors improved slightly in January, but their assessment of the economy's current condition deteriorated to a four-year low.
Japan's exports and imports also fell short of market expectations, with exports posting their biggest fall in more than two years.
In commodities, U.S. West Texas Intermediate (WTI) crude futures was up 0.9 percent at $53.5 per barrel after shedding 1.9 percent the previous day. (Additional reporting by Sujata Rao and Helen Reid in LONDON and Hideyuki Sano and Shinichi Saoshiro in TOKYO Editing by Andrew Heavens)