* Wall Street set for positive start, lifts Europe 1 percent
* Emerging stocks fall 1.7 percent
* Oil briefly dips below $59 barrel, the rises above $60.50
By Jeremy Gaunt, European Investment Correspondent
LONDON, July 13 (Reuters) - European shares reversed course on Monday and headed higher as Wall Street looked set for a positive start, although world shares were lower with particularly heavy losses in emerging markets.
Investors in general fretted about a coming wave of corporate earnings and confidence in a rapid global economic recovery faded, epitomised by oil dipped briefly below $59 a barrel.
But crude rallied later, however, stand above $60.50.
"I don't think we will see an economic recovery this year and ... earnings estimates are still too high, so there is room for disappointment," said Philippe Gijsels, senior equity strategist at Fortis Bank, in Brussels.
World stocks as measured by MSCI lost close to 0.2 percent, off earlier losses of three quarters of a percent. The FTSEurofirst 300 index of top European shares also rose more than 1 percent, but only after hitting an 11-week low.
European sentiment was lifted as the oil price turned around. Dutch conglomerate Philips Electronics earlier surprised the market with a return to profit in the second quarter and said it was hopeful of an upturn in business in the second half of 2009.
Emerging markets suffered more acutely, taking the MSCI sector index down 1.7 percent. The sector has been the big winner as investors have banked on a recovering economy, so would likely unwind quicker if a major correction set in.
So far in the U.S. earnings season, two major U.S. companies had reported, giving investors mixed signals. Bellwether Alcoa posted a third consecutive quarterly loss, but beat estimates; oil major Chevron warned that second-quarter earnings would be hit by a decline in U.S. refining margins.
Among U.S. companies reporting this week are Goldman Sachs, JP Morgan, Bank of America, Citi, IBM, Google, Intel and GE.
European reports will come from Nokia, Alstom, Novartis and Pernod Ricard.
YEN RISES
The yen rose broadly, hitting a five-month high against the dollar and an eight-week peak against the Australian dollar as concern over upcoming U.S. corporate earnings heightened investors' aversion to risk.
Commodity-based currencies, particularly the Australian and New Zealand dollars, were hit hard by the falling oil price.
"Risk aversion trades are coming back into the market again and the yen is the main currency to benefit from that," CMC Markets analyst James Hughes said.
"This week there is heavy focus on the U.S. earnings seasons and investors will want to see that any recovery for major companies is revenue-based and not cost-cutting based," he added.
The dollar hit a five-month low against the yen of 91.73 yen on electronic trading platform EBS. It was later down only slightly at 92.45 yen.
The euro edged up 0.3 percent against the dollar at $1.397.
On euro zone government bond markets, the interest rate-sensitive two-year Schatz yield was steady at 1.216 percent. (Additional reporting by Atul Prakash and Jessica Mortimer; Editing by Victoria Main)
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