* Dollar pressured by Russia comments on FX reserves
* German investor sentiment rise in June
* MSCI world stock index off two-week lows
By Ian Chua
LONDON, June 16 (Reuters) - European stocks tentatively recovered from an early fall on Tuesday following a survey showing German investor sentiment surged in June, while the dollar stayed under pressure after Russia said the world needs new reserve currencies.
Ahead of a formal meeting of the world's biggest emerging economies, Russian President Dmitry Medvedev told leaders of a summit of the Shanghai Cooperation Organisation that the creation of new reserve currencies was needed to consolidate the international monetary system.
Market speculation has been rising that some countries may be looking to diversify reserves portfolios away from U.S. Treasuries in the future.
Investor appetite for riskier assets had taken a hit after disappointing U.S. regional manufacturing data on Monday prompted a selloff in U.S. stocks, which marked their worst slide in a month.
But a closely watched survey showing German analyst and investor sentiment rose in June to its highest level since May 2006 helped restore some optimism.
"The assessment of the experts indicates that the economic downturn dynamics are currently coming to rest. They further see tendencies for a recovery at the end of this year," said ZEW President Wolfgang Franz.
"This cautious optimism should not be destroyed by overly pessimistic projections."
While central banks of Japan and Australia have reported signs of improvement in their economies, investors are looking for more definitive signs of recovery after recent economic indicators suggested the global slowdown may be easing.
The MSCI world equity index edged 0.1 percent lower to 246.06, having earlier touched 244.80 -- the lowest since May 29.
The FTSEurofirst 300 index of top European shares climbed 0.1 percent, reversing early losses after the German survey results and steadying from Monday's 2.5 percent decline, but benchmark emerging equities slid 0.5 percent.
Earlier, Japan's Nikkei lost 2.9 percent, while MSCI's measure of other Asian stock markets shed 1.1 percent.
U.S. crude gained 66 cents to $71.28, having earlier dipped below $70 a barrel.
DOLLAR DOWN
Demand for lower-risk government debt also ebbed as stocks tentatively recovered, pushing yields off lows. The 2-year euro zone benchmark government bond yield was at 1.62 percent, but still well off a 5-1/2 month high of around 1.83 percent set last Thursday.
The benchmark 10-year U.S. Treasury note yield stood at 3.72 percent, holding below last week's eight-month highs of 4 percent.
Meanwhile, the dollar fell broadly after those comments from Russia, reversing a climb from a near four-week high against the euro.
"Stocks had a terrible day yesterday and again today, which had helped the dollar, but the Russia comments before the BRICs meet is weighing on the dollar," said Johan Javeus, chief currency strategist at SEB Bank in Stockholm.
Against a basket of major currencies, the dollar fell 0.9 percent. It slipped 1.1 percent to 96.78 yen, after falling as low as 96.08 yen on EBS in early European trade.
The euro rose 0.8 percent to $1.3901 but the single currency slipped 0.3 percent against the Japanese unit to 134.52 yen. (Additional reporting by Naomi Tajitsu; Editing by Stephen Nisbet)