LONDON - Global markets showed signs of recovery in early European trading on Thursday, with stocks rising and the US dollar pulling back from recent gains, while finance chiefs of the US, Japan and Korea issued a rare warning about currency weakness.

Stock markets sold off earlier this week, while Treasury yields and the US dollar surged to multi-month highs, as investors were spooked by tensions in the Middle East after Iran's missile and drone attack on Israel on April 13. Mixed quarterly company earnings so far and recent comments from the US Federal Reserve, which dampened rate cut expectations, also made investors more risk-averse.

The risk-off pullback showed signs of easing on Thursday. Asian stocks made their biggest gains in a month and European stocks opened higher, helped by more positive company earnings.

At 0855 GMT, the MSCI World Equity Index was up 0.2 percent on the day, but still down 1.9 percent so far this week.

The pan-European STOXX 600 was up 0.2 percent, while London's FTSE 100 was up 0.3 percent.

Fiona Cincotta, senior markets analyst at City Index, said that markets were being supported by a shift in focus away from the Fed and towards upcoming earnings, including Netflix later on Thursday.

Comments from European Central Bank vice president Luis de Guindos and an easing of oil prices have also helped support sentiment in Europe, she added.

"There’s still a little bit of optimism of lower rates, in the eurozone, that’s helping support European stocks," Cincotta said.

Oil prices eased, with Brent futures down 0.5 percent at $86.87 a barrel and US West Texas Intermediate (WTI) crude futures down 0.5 percent at $82.27 a barrel.

The two benchmarks slid 3 percent on Wednesday, in a move attributed to signs that fuel demand is lower than expected this year.

Lower oil prices can be seen as positive for stock markets as they help contain inflation, improving the chances for central bank interest rate cuts.

Analysts do not expect dramatic new sanctions on Iranian oil, which accounts for about 3 percent of global output.

The US dollar index was down 0.1 percent at 105.84 and the euro was up by less than 0.1 percent at $1.0677. The dollar had surged in recent weeks, and is up 1.3 percent so far this week after the index hit as high as 106.51 on Tuesday.

The United States, Japan and South Korea agreed to "consult closely" on foreign exchange markets in their first trilateral finance dialogue on Wednesday, acknowledging concerns from Tokyo and Seoul over their currencies' recent sharp declines.

Analysts said the rare warning from the three countries' finance chiefs may lay the groundwork for Japan to intervene in the yen.

The dollar-yen pair was at 154.34, within sight of Tuesday's 154.79, which was the yen's weakest in 34 years.

US Treasury yields were edging down, with the 10-year yield at 4.5711 percent and the 2-year yield at 4.9241 percent.

Eurozone government bond yields also edged lower, with Germany's 10-year yield down 3 basis points at 2.441 percent.

Gold was a touch higher at 2,379.77.