* World stocks up slightly, Wall St set for gains
* European shares up 1 pct after credit worries
* Dollar flat, bonds slide
By Jeremy Gaunt, European Investment Correspondent
LONDON, Dec 10 (Reuters) - World equities managed modest gains on Thursday following five sessions of losses, with Europe rebounding strongly after recent hits on concern over some of the region's more vulnerable economies.
Wall Street looked set for a positive start, while the dollar was steady and demand for government bonds slipped.
Globally, investors have been closing books ahead of the year-end in a climate of concern about the creditworthiness of various troubled economies.
Ratings agency Standard & Poor's on Wednesday warned that Spain risks a debt downgrade in two years if the government does not take tough action on its fiscal deficit.
Fitch Ratings has already downgraded Greece, while Moody's cut the ratings of six Dubai-linked issuers after concluding that no "meaningful" government support would be provided to top firms such as DP World.
"The market will remain volatile until the end of the year," said Luc Van Hecka, chief economist at KBC Securities.
"Most of the major long-term investors have already closed their books for the rest of the year. The market is really in the hands of traders," he said.
MSCI's all-country world stock index was up 0.15 percent on the day, having lost more than 3 percent since hitting a new year-high a week ago.
The pan-European FTSEurofirst 300 was up 1 percent.
REBOUNDING DOLLAR
The overall mood has lifted the dollar, which is up some 2 percent over the past week against a basket of currencies. It was relatively unchanged on Thursday.
The euro was up a little against the dollar. The Australian and New Zealand dollars jumped on expectations of higher interest rates.
"Interest rates are becoming a more important factor, and the market is looking more at fundamentals now," said You-Na Park, Commerzbank analyst in Frankfurt.
The euro was trading at $1.4730, not far from November lows.
Euro zone government bond yields were slightly higher. The spread between German and Greek bonds was also settling down and was about 8 basis points narrower on the day. (Additional reporting by Atul Prakash and Jessica Mortimer, editing by Hugh Lawson)