GLOBAL MARKETS-Stocks at 1-yr highs; dlr, yen down

* MSCI world equity index near 12-month high

* Dollar, yen weaker; euro, pound gains as confidence mounts

* Results from Bank of America and General Electric awaited

By Simon Falush

LONDON, Oct 16 (Reuters) - World stocks held near a one-year high and the euro held firm against the dollar on Friday as optimism about the third-quarter corporate earnings season mounted, hitting bonds and the safe-haven yen.

Global equities are heading towards highs last seen before the collapse of Lehman Brothers as major companies reported better than expected results, with JPMorgan setting a high bar.

Google and IBM results continued a trend of beating analysts forecasts helping European stocks <.FTEU3> gain 0.7 percent in early trade and touch their highest level since early October 2008.

The MSCI world equity index <.MIWD00000PUS> held near a 12 month high, and is up 73 percent since touching a six year trough in March, but it is still 6.7 percent below its level before Lehman Brothers collapsed last September.

Investors were awaiting results from General Electric and Bank of America , looking for more evidence the global economy is quickly shaking off the recession caused by the financial crisis.

"General Electric figures are seen better. But, in the banking sector there is a division between the investment and the retail banking sides," said Justin Urquhart Stewart, director at Seven Investment Management.

"As far as the investment banking side has been concerned these have been very good figures, but not sure if they are going to be repeated and on the retail side it is going to get weaker," he said.

DOLLAR, YEN WEAKEN

The dollar and yen , which tend to retreat as risk appetite gains, fell to a one-year low against the euro .

"An increasingly positive mood on the global economy has been supporting higher-yielding currencies. While the yen is not one of these currencies, it had been firming, and now we are seeing some correction," said Ayako Sera, market strategist at Sumitomo Trust & Banking in Tokyo.

The euro was up 0.3 percent at $1.4896 , while the greenback was 0.6 percent higher at 91.08 yen .

Sterling continued its recovery after comments from policymaker member Paul Fisher prompted speculation that the Bank of England would not extend quantitative easing.

Oil rose for a seventh straight session to just below $78 per barrel, after touching a one-year high on improved demand outlook, a weaker dollar and an unexpectedly steep drop in U.S. oil product stocks.

Bund futures also suffered in the face of the increased confidence in the global economy, down 25 ticks on the day at 121.18. (Additional reporting by Joanne Frearson and Kaori Kaneko in Tokyo; editing by Chris Pizzey)