GLOBAL MARKETS-Stocks rebound despite nagging debt jitters

* World equities rise, helped by upbeat company results

* Greek, U.S. debt woes weigh; European yields rise

* Weaker dollar propels gold to record high; oil rises

* China warns on inflation dangers, forex reserves (Updates market action, adds fresh quote)

By Richard Leong

NEW YORK, April 19 (Reuters) - World stocks rose on Tuesday, recouping the prior day's losses, but nagging debt worries on both sides of the Atlantic and new signals of inflation dangers in China curbed appetite for risk.

A weaker dollar propelled gold to a record peak above $1,500 an ounce and oil in New York above $108 a barrel.

Investors dipped their toes back into stocks and other risk assets in part on solid company results, a day after Standard & Poor's jolted markets when the debt rating agency warned that political gridlock in Washington is impeding work on paring the $14 trillion federal debt load.

"People took a deep breath and stepped back," said Mark Pawlak, market strategist at Keefe, Bruyette & Woods in New York. "It's not a hugely significant event (for the United States) because there are precedents for this S&P move with other AAA-rated sovereign credits. This helped stocks to stabilize."

However, a likely protracted U.S. budget fight and speculation about a Greek debt restructuring should weigh on stocks, even if there were upbeat results from Apple and corporate heavyweights in the coming days, he said.

"Stocks are just chopping in a tight range," Pawlak said.

MSCI's all-country world stock index <.MIWD00000PUS> rose 0.6 percent, retracing some of Monday's 1.6 percent loss, which was the biggest one-day drop in a month.

Wall Street stocks <.DJI> <.SPX> closed up 0.5 percent in choppy trading. Better-than-expected results from investment bank Goldman Sachs and healthcare company Johnson & Johnson stoked bids for U.S. shares after they fell more than 1 percent on Monday on sovereign debt worries. [.N]

Solid earnings from luxury goods makers LVMH and Burberry spurred a 0.4 percent rise in European stocks <.FTEU3> after a 2 percent drop on Monday.

Japan's Nikkei <.N225> closed down nearly 1.3 percent after prior day's losses in the United States and Europe.

Investor unease persisted over a possible Greek debt restructuring that could further strain the euro zone.

Greece sold 1.6 billion euros of three-month debt but was forced to pay a yield of more than 4 percent, more than quadruple what Germany -- the euro zone's strongest member -- pays on similar obligations.

DOLLAR SLIPS

Standard & Poor's rattled investor confidence on Monday when it changed its outlook on the United States to negative from stable, threatening the future of the prized AAA credit rating for the world's top economy.

In currency trading on Tuesday, the U.S. dollar slipped 0.6 percent against a basket of major currencies <.DXY> after making headway the previous day.

Monday's dollar gains came on a rush for safe havens despite the risk of S&P downgrading U.S. debt in two years if Washington fails to achieve a budget plan that relies less on debt.

S&P's warning intensified scrutiny of the U.S. budget deficit and the political fight to slash it. The deficit is a key element in the global imbalances that worry many investors and policymakers.

There was no direct reaction to the S&P move on Tuesday from Beijing, which holds vast reserves of U.S. Treasuries. However, the head of China's central bank said the country should diversify investments as its some $3 trillion of foreign exchange holdings had grown too large.

Another Chinese rate setter said inflation pressures gave further scope for a rise in banks' reserve requirements following seven increases -- together with four raises in benchmark interest rates -- since October.

The euro recovered from the previous day's sell-off, helped by encouraging economic data. For details, see [FRX/]

The single currency rose 0.7 percent to $1.4336 . Overall, it has pulled back sharply, having hovered at a 15-month high around $1.4520 for the past week.

Lingering worries over the cost to bail out peripheral countries exerted pressure on the European debt market, which lagged U.S. Treasuries. Ten-year Greek bond yields were last up 17 basis points at a euro-era high of 14.815 percent, while German Bund futures fell 0.3 percent to 122.12.

The benchhmark U.S. 10-year note's yield slipped 2 basis points to 3.36 percent, its lowest in three weeks. (Additional reporting by Rodrigo Campos, Steven C. Johnson, Chris Reese, Robert Gibbons and Frank Tang in New York; editing by Jonathan Oatis)