* MSCI world equity index down 0.5 percent at 306.56
* China tightening weigh on shares and oil, boosts dollar
* Euro hits 5-month low vs dollar
By Natsuko Waki
LONDON, Jan 20 (Reuters) - World stocks slipped on Wednesday after reports of bank lending restrictions in China, while the euro hit a five-month low against a broadly stronger dollar with concerns about Greece's fiscal problems nagging investors.
Official media and banking sources said Chinese authorities had instructed some major banks to curb their lending over the rest of this month after an early burst of credit. The central bank has also told some individual lenders to increase their reserve requirement ratio by half a percentage point.
Signs of tighter policy in China weighed on higher-yielding commodity currencies such as the New Zealand dollar, leading to a stronger dollar across the board.
That in turn hit the euro, which was already under pressure from flagging market confidence in Greek public finances and a report on Tuesday showing a bigger-than-expected decline in German investor sentiment.
Investors are also cautious as more companies announce their fourth-quarter earnings results. Bank of America, Morgan Stanley and Wells Fargo report later on Wednesday.
"The China story is in the market, but we have had mixed numbers on financials and that's injecting some volatility into the market," said Peter Dixon, economist at Commerzbank. "There are question marks over earnings numbers in 2010." MSCI world equity index fell half a percent, having hit its highest in 15 months earlier this month. Chinese stocks lost nearly 3 percent.
U.S. stock futures fell around 0.6 percent. Citigroup reported a narrower quarterly loss in the final three months of 2009 on Tuesday, following disappointing results at JP Morgan on Friday.
The FTSEurofirst 300 index dropped 0.5 percent while emerging stocks fell 0.8 percent.
U.S. crude oil fell 1.7 percent to $77.65 a barrel on worries that China's tightening may weaken energy demand.
Bund futures rose 26 ticks.
The dollar rose 0.8 percent against a basket of major currencies while the euro fell as low as $1.4132.
Benchmark 10-year bond yield spreads between safer Germany and Greece widened to 279 basis points from 265 basis points.
Greece's ballooning debt level, estimated at more than 120 percent of gross domestic product, has prompted speculation that the country may be unable to service its obligations.
The European Union and rating agencies piled pressure on Greece on Tuesday to quickly implement budget reduction plans resisted by trade unions.
Standard & Poor's and Moody's said it was key for Greece to start immediately cutting its budget deficit, which hit 12.7 percent of gross domestic product in 2009. (Additional reporting by Simon Falush; Editing by Andy Bruce)