GLOBAL MARKETS-Shares pare gains as corporate earnings mixed

* Global stocks pare gains after hitting one-month highs

* Euro zone government bond yields edge up

* Dollar rises, commodities weaken

By Atul Prakash

LONDON, July 17 (Reuters) - Global equities pared gains on Friday after hitting a one-month high as mixed earnings from major U.S. companies including General Electric and Bank of America forced investors to trade cautiously.

The market was digesting results from Citigroup , the embattled banking giant scrambling to survive the financial crisis, as it reported a second-quarter profit driven by gains on its Smith Barney deal. [ID:nN17470666]

But its primary banking businesses continued to suffer rising credit losses. Stripping out the one-off gain from the brokerage venture, Citigroup had a loss of 26 cents a share, narrower than analysts' consensus forecast of a 31 cent loss, according to Reuters Estimates.

The results followed reassuring figures earlier this week from JPMorgan , Goldman Sachs and Intel .

MSCI's global equities index <.MIWD00000PUS>, which has gained 6 percent so far this week on earnings results, was up 0.2 percent after hitting its highest since mid-June, while Wall Street looked set for a cautious start.

European shares also cut gains. The FTSEurofirst 300 <.FTEU3> index of top shares was up 0.3 percent, while Britain's FTSE100 <.FTSE>, Germany's DAX <.GDAXI> and France's CAC <.FCHI> rose between 0.4 percent and 0.6 percent.

"For both Bank of America and Citi, it is kind of a mixed bag," said Walter Todd, portfolio manager at Greenwood Capital Associates in South Carolina.

"They both seem to reserve a lot for credit losses in all parts of the business. That's the bad news. The good news is the bank earnings looked really strong, which should be the case."

Bank of America posted a lower quarterly profit, as core results were hurt by a surge in troubled loans as more credit card and mortgage customers fell behind on payments.

General Electric reported a sharply lower quarterly profit and missed Wall Street's revenue targets on weakness at its finance and NBC media businesses.

CAUTIOUS APPROACH

Some analysts said that it was too early to be overly optimistic about the global economy as data was still ringing warning bells and some companies face a liquidity crunch.

"The market is looking for good news and it is interpreting everything as good news. Whether it is interpreting it correctly, I am not too sure," said Justin Urquhart Stewart, director at Seven Investment Management.

A survey showed on Thursday that factory activity in the U.S. Mid-Atlantic region contracted for a 10th consecutive month in July, posting a worse than expected decline. [ID:nN16411053]

But on a brighter note, new U.S. housing starts and permits jumped more than expected in June. [ID:nN16425610]

CIT Group Inc was in discussions on Thursday with potential lenders to secure financing, after the collapse of rescue talks with the government left the 101-year-old U.S. lender to hundreds of thousands of small and medium-sized businesses on the brink of bankruptcy. [ID:nN16442670]

Euro zone government bond yields climbed in choppy trade, but worries about the possible bankruptcy of CIT Group and bomb blasts in Indonesia provided some support for the bond market.

"There's always a knee-jerk reaction to geopolitical events and there's some worry on news about CIT's pending bankruptcy, said Nick Stamenkovic, a strategist at RIA Capital Markets.

However, the dollar and the yen were firmer against other major currencies, reflecting caution about corporate earnings. The euro was down 0.5 percent at $1.4077 and down 0.4 percent at 132.17 yen .

"Currencies are very much driven by sentiment on equity markets at the moment, which is difficult to predict, but the current uncertainty is helping the dollar higher," said Brown Brothers Harriman currency strategist Audrey Childe-Freeman.

A rise in the dollar pressured oil and gold , as a firmer U.S. currency made the dollar-priced commodities costlier for other currency holders. Copper was down on a rise in metal stocks at the London Metal Exchange warehouses. (Additional reporting by Emelia Sithole-Matarise, Brian Gorman, Jessica Mortimer, Dominic Lau and Tamawa Desai) (To read Reuters Global Investing Blog click on http://blogs.reuters.com/globalinvesting; for the MacroScope Blog click on http://blogs.reuters.com/macroscope; for Hedge Hub click on http://blogs.reuters.com/hedgehub)