* Strong earnings, prospect of U.S. tax cuts drive world stocks
* European earnings also beat expectations, shares edge higher
* World equity index up nearly 2 pct this week, 8 pct in 2017
* Euro holds on to bulk of gains made after French vote
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh (Adds quote, updates prices)
By Abhinav Ramnarayan
LONDON, April 26 (Reuters) - World stocks hit a record high on Wednesday after strong earnings and the prospect of tax cuts for corporate America boosted U.S. shares and the euro held on to recent gains as political concerns in France ebbed.
European shares edged higher towards 20-month highs hit earlier this week after centrist Emmanuel Macron's win in the first round of French presidential elections considerably reduced the risk of a French exit from the single currency.
On Wednesday, high-than-expected earnings from European companies helped European stocks reverse early falls and edge higher.
"We have had 25 percent of companies reporting, and a majority of those have beaten estimates," said Emmanuel Cau, global equity strategist at JP Morgan.
"Pretty much every single euro zone data point out has surprised to the upside, and this is driving upgrades."
Overall, first-quarter earnings for STOXX 600 companies were expected to rise 5.5 percent, according to Thomson Reuters I/B/E/S data. Revenues are expected to increase 5.7 percent.
That compares to the 11.4 percent earnings growth expected for top U.S. companies.
The euro held on to the bulk of the gains made earlier this week; it fell 0.27 percent to $1.0897 against a strengthening dollar, but is still up over 1.5 percent from Friday's close.
Against a backdrop of receding concern over the French presidential elections, U.S. President Donald Trump struck a conciliatory note and flagged tax cuts, boosting investor optimism and demand for risky assets.
This, along with a strong set of earnings for U.S. companies for the first quarter pushed the MSCI world equity index , which tracks shares in 46 countries, up 0.1 percent to a fresh record high. It is up nearly 2 percent this week and 8.35 percent since the start of the year.
"On top of (the French election result) we have had a very decent set of corporate earnings in the U.S. and that helped push the market further along the same direction," said Investec economist Philip Shaw.
"I am unsure how further along we really are on the tax cutting agenda, but it is certainly not doing market sentiment any harm," he added.
Further details on President Trump's tax cutting plans are expected to be announced later on Wednesday, potentially reviving reflation bets.
The threat of a U.S. government shutdown this weekend also receded after Trump backed away from demanding Congress include funding for his planned border wall with Mexico in a spending bill.
The slew of positive news pushed the Nasdaq composite to a record high on Tuesday while the Dow and S&P 500 brushed against recent peaks.
U.S. Treasury yields, meanwhile, rose above 2.30 percent for the first time in two weeks.
"U.S. bond yields have broken higher without the support of commodity prices which is one of the clearest signs that the Trump trade is back," Morgan Stanley analysts said in a note.
Oil prices resumed their downward trend on Wednesday as data showed a rise in U.S. crude inventories and record supplies in the rest of the world cast doubt on OPEC's ability to cut supplies and tighten the market.
Euro zone government bond yields nudged up ahead of Trump's keenly anticipated tax announcement.
Investors were also looking ahead to Thursday's policy meeting of the European Central Bank.
While no changes are expected, policymakers see scope for sending a small signal in June towards reducing monetary stimulus, according to sources, another factor underpinning the single currency.
For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets (Additional reporting by Helen Reid, Editing by Toby Chopra)