GLOBAL MARKETS-European shares fall, bucking global trend

LONDON Jan 27 (Reuters) - World stocks rose on Tuesday with Japan climbing sharply as the government moved to rescue capital-strapped companies and Wall Street looked set for a positive start.

European shares bucked the trend, however, falling on profit-taking a day after solid gains.

The dollar recovered from earlier losses, but Britain's battered pound gained around 0.8 percent on the greenback.

Government intervention was a key theme for the day with Japan throwing a $16.7 billion lifeline to companies threatened by the global financial crisis.

It was an attempt to try to shield the shrinking economy from more job losses and bankruptcies. Japanese state banks will buy shares in non-financial companies threatened by collapsing demand and frozen credit markets.

The move sent Tokyo's benchmark Nikkei .N225 up 4.9 percent for the day.

Shares in Europe, however, failed to follow through. The pan-European FTSEurofirst 300 .FTEU3 index was down 1.1 percent. It gained more than 3 percent on Monday.

"It is profit-taking after a good day yesterday. There is still a lot of uncertainty in the market, volumes are low," said Howard Wheeldon, strategist at BGC Partners.

Overall, MSCI's main world stock index .MIWD00000PUS gained 0.5 percent.

In the meantime, a report showed that trust in business plummeted worldwide last year.

Some 62 percent of respondents told the Edelman Trust Barometer that they trusted businesses less than they had a year ago, with respondents in the United States and Western Europe more suspicious than those in emerging economies.

The biggest drops came in Ireland, where 83 percent of respondents said they had lost trust in business; in Japan, where 79 percent grew more wary; and in the United States, where 77 percent became more suspicious.

DOLLAR DECLINES

The euro EUR= was up 0.1 percent against the dollar at $1.3182, well off its highs.

Britain's pound gained 0.8 percent to $1.4075 GBP= and the dollar was up 0.1 percent against the yen to 89.09 JPY=.

Two-year Schatz yield EU2YT=RR was down 2 basis points at 1.649 percent. Earlier, the yield hit 1.747 percent -- its highest since Jan. 8.

The 10-year Bund yield EU10YT=RR was down 0.6 basis points at 3.272 percent. Earlier, the yield marched higher to 3.364 percent - its highest since Nov. 26.

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here (Editing by Ian Jones)