* Short covering helps European markets shrug off weak PMIs
* Global stocks erase gains for the week
* Euro hits over 1-week low
* U.S. retail sales due
By Ritvik Carvalho
LONDON, April 18 (Reuters) - Global shares erased this week's gains on Thursday after weak manufacturing surveys from Asia and Europe stoked fears of a widespread slowdown in growth, adding to profit-taking ahead of the long Easter weekend.
French and German surveys of purchasing managers in the manufacturing sector for April showed activity continuing to contract, hitting European stocks in early trade.
However, short-covering helped Germany's DAX trade half a percent higher by afternoon in London and the pan-European STOXX 600 index was higher 0.2 percent.
The euro fell to its lowest in over a week after the data, last down 0.3 percent on the day to $1.1253.
German 10-year bond yields were three basis points lower at minus 0.5 percent, dropping further off Wednesday's high of 0.10 percent.
Activity in Germany's services sector rose to a seven-month high in April, but investors focused on the 44.5 reading for the manufacturing sector, well below the 50.0 mark separating growth from contraction even if it was above the 44.1 reading last month.
"Overall, these prints confirm that Europe’s growth engine entered Q2 on a soft footing, and other things equal, they raise the likelihood that the ECB (European Central Bank) may roll out some more stimulus, or at least that any rate hike may be pushed further back," said Marios Hadjikyriacos, investment analyst at XM.
The weak surveys out of Europe added to a reading of Japanese manufacturing activity which showed new export orders fell at the fastest pace in almost three years.
MSCI's All Country World Index, which tracks stocks in 47 countries, was down 0.2 percent on the day. It erased all gains for the week after the German data.
The VIX volatility index, also known as Wall Street's "fear gauge", inched up to 12.61, close to where it was at the start of the week. On Wednesday, the index had fallen to its lowest since August 2018.
E-mini futures for the S&P 500 were flat.
Market participants are also eyeing signs of progress in U.S.-China trade negotiations.
Washington and Beijing set a tentative timeline for a fresh round of face-to-face meetings ahead of a possible signing ceremony in late May or early June, according to a Wall Street Journal report.
The U.S. trade deficit fell to an eight-month low in February as imports from China plunged, data on Wednesday showed.
Separate figures from China earlier on Wednesday showed the world's second-largest economy grew at a steady 6.4 percent pace in the first quarter, defying forecasts for a slowdown.
Attention is now turning to how much more stimulus Beijing will apply without triggering more financial risks.
Elsewhere in currencies, the dollar was 0.3 percent higher against a basket of peers at 97.293.
The Australian dollar was 0.3 percent lower at $0.7157. It had earlier jumped to $0.7200 as traders wagered the Reserve Bank of Australia will not rush to ease rates even though the broader economy has seemingly lost momentum.
Oil prices rose slightly, boosted by a decline in U.S. inventories, ongoing supply cuts from OPEC and its allies, and U.S. sanctions on Venezuela and Iran.
Brent crude futures were 0.3 percent higher at $71.87 per barrel, while U.S. crude futures were also 0.3 percent higher at $63.97.
For Reuters Live Markets blog on European and UK stock markets, please click on: (Reporting by Ritvik Carvalho; additional reporting by Abhinav Ramnarayan in London and Shinichi Saoshiro in Tokyo; Editing by Janet Lawrence and Toby Chopra)