GLOBAL MARKETS-European shares edge up, dollar dips

* European shares rise, oil hovers near 20-month lows

* MSCI world equity index down 0.23 percent at 223.47

* Dollar dips, sterling hits 12-year trade-weighted low

By Carolyn Cohn

LONDON, Nov 12 (Reuters) - European stocks recovered some ground on Wednesday after steep losses in the previous session and the dollar dipped, but oil hovered near 20-month lows on ongoing worries about a slowdown in global demand.

Weak corporate earnings dragged down U.S. stocks and Asian shares followed, with shares of General Motors (GM.N: Quote, Profile, Research, Stock Buzz) sliding to a 65-year low on Tuesday on mounting worries about whether it can avoid bankruptcy.

But European mining shares tracked firmer metals prices and banks advanced after recent losses. Gold rose and platinum gained more than 3 percent, helped by a weaker dollar.

The FTSEurofirst 300 index of top European shares rose 0.29 percent to 886.13, after falling more than 4 percent on Tuesday. The index has lost about 40 percent this year, hit by the global credit crunch and resulting economic slowdown.

"The markets are still being buffeted by growth concerns, equity market weakness and risk aversion," said analysts at Calyon in a client note.

"Whilst perhaps not in the crisis situation of a few weeks ago, nervousness continues to undermine risk appetite."

World Bank President Robert Zoellick warned global trade may drop next year for the first time in more than a quarter of a century as the global credit crisis cuts into trade financing. [ID:nN11546001]

Russia's RTS share index .IRTS fell 7.8 percent, dragged down by U.S. and Asian markets and falling oil. The more liquid MICEX index was suspended limit down until Thursday.

U.S. crude oil CLc1 fell 90 cents a barrel to $58.41, close to its lowest since March 2007 and down more than $80 from record peaks hit in July.

The dollar dipped after earlier hitting two-week highs against the euro , to trade around half a percent lower at $1.2577. It steadied against the yen at 97.75 .

POUND SLIDES

Sterling hit 12-year lows on a trade-weighted basis <=GBP> on worries about a UK recession and expectations of further monetary easing, after a shock 150-basis point UK rate cut last week.

"Overall, sentiment is negative for sterling as weak data have intensified recession fears and on expectations of continued aggressive rate cuts by the Bank of England," said Commerzbank currency strategist Antje Praefke in Frankfurt.

The Bank of England will release its quarterly inflation report at 1030 GMT and is expected to slash its growth forecast and warn that inflation may undershoot its 2 percent target next year.

Euro zone government bonds were under pressure on the prospect of absorbing the day's sizeable new issuance.

Germany will offer 7 billion euros of new 10-year Bunds, with a $25 billion auction of 3-year notes in the U.S. to follow.

Two-year euro zone government bond yields were up 3.4 basis points and 10-year yields were up 1.9.

The MSCI global emerging equities index .MSCIEF fell 1.28 percent and emerging sovereign debt spreads widened by 7 basis points to 599 bps over U.S. Treasuries 11EMJ. (Editing by Mike Peacock)