* MSCI world equity index up 0.3 percent at 240.21
* Euro higher after upbeat German data
* Oil erases early losses to rise more than 1 percent
By Natsuko Waki
LONDON, July 7 (Reuters) - The euro rose broadly, world stocks turned higher, and energy and commodity prices rebounded on Tuesday after upbeat German manufacturing data helped to inject optimism about a global economic recovery.
Investors sought mining stocks, helping to erase early losses in European shares. They are also awaiting second-quarter corporate results, and aluminium producer Alcoa will start the U.S. earnings season when it reports on Wednesday.
Manufacturing orders in Europe's largest economy rose at the strongest pace in nearly two years in May, posting the third consecutive monthly gain. April's reading was also revised up.
"This underscores expectations that we have the worst behind us. However, we shouldn't celebrate too much," said HSBC Trinkaus economist Lothar Hessler.
The euro rose to the day's highs of $1.4047 and 86.50 British pence after the German data. MSCI world equity index was up 0.4 percent while the FTSEurofirst 300 index rose half a percent. Basic resource stocks were the best performers of the day, rising 2.7 percent.
Copper for three-month delivery on the London Metal Exchange traded at $4,985 a tonne, up from $4,970 on Monday. U.S. crude oil rose 1.2 percent to $64.79 a barrel.
Laura D'Andrea Tyson, an adviser to President Barack Obama, said the United States should be planning for a possible second round of fiscal stimulus to prop up the economy after the $787 billion rescue package launched in February.
EARNINGS FEAST
According to Thomson Reuters data, analysts expect Standard & Poor's 500 corporate earnings to fall 36 percent from a year earlier. This compares with a forecast of a decline of 31.1 percent back in April and an increase of 28.5 percent in October.
Analysts still expect a sharp V-shaped rebound in earnings growth with an anticipated growth rate of 183.0 percent in the fourth quarter -- leaving room for a sizeable downgrade if the economy does not recover as expected.
"The expectations for the fourth quarter of this year are particularly high ... If these ambitious forecast aren't met, investors may be disappointed, creating headwinds for equity markets," Dirk Wiedmann, head of investments at Rothschild Private Banking & Trust, said in a note to clients.
"That said, liquidity levels are rising and there is still a large amount of cash on the sidelines as most institutional and private investors are currently underweight in equities."
Emerging stocks were steady on the day.
The September Bund future fell 36 ticks, off a seven-week peak set in the previous session.
The dollar fell 0.3 percent against a basket of major currencies while the yen was steady at 95.30 per dollar.