GLOBAL MARKETS-Euro trims losses on BoE, ECB; shares down

* MSCI world equity index down 0.7 percent

* Euro, sterling trim losses on BoE, ECB cuts

* European shares rise briefly, then dragged lower by U.S.

By Carolyn Cohn

LONDON, Dec 4 (Reuters) - Sterling and the euro trimmed losses but European shares reversed initial gains after the Bank of England (BoE) and the European Central Bank (ECB) cut interest rates on Thursday to kickstart recession-hit economies.

The BoE cut rates by 100 basis points to 2 percent and the ECB by 75 bps to 2.5 percent, the biggest cut in the euro zone central bank's existence. Markets had started to position for large rate moves after hefty cuts of 150 basis points from New Zealand and 175 bps from Sweden earlier in the session.

"The central banks are responding with considerable verve. They recognise the urgency with which they have to cut rates," said Mike Lenhoff, chief strategist at Brewin Dolphin.

The euro was down 0.63 percent on the day at $1.2633 EUR= but off the day's lows.

Sterling was down 0.91 percent at $1.4640 GBP= and 0.3 percent against the euro at 86.25 pence EURGBP=, off 6-3/4 year lows against the dollar and record lows against the euro hit earlier on Thursday.

The FTSEurofirst 300 index of leading European shares .FTEU3 initially rose, but quickly reversed those gains in line with falling U.S. futures, following disappointing news from U.S. companies DuPont (DD.N) and Merck (MRK.N).

The MSCI world equity index .MIWD00000PUS fell 0.7 percent on the day.

NERVES REMAIN

While actions taken by central banks and governments help the economy, investors remain nervous that major economies -- most of them already in recession -- are deteriorating rapidly.

Such concerns have pushed oil, which is sensitive to global growth, below $46 a barrel CLc1 to its lowest in nearly four years.

U.S. crude oil fell 2.39 percent to $45.65 a barrel, losing more than $100 in the space of just four months.

"The recession in the euro zone seems to worsen by the day, while at the same time inflation is no longer a concern," said Carsten Brzeski at ING Financial Markets.

However, the decisive ECB rate cut took the edge off recent sharp government debt moves.

Demand for safer government bonds accelerated this week after the Federal Reserve signalled it could buy government and agency bonds and the United States was confirmed to have entered recession last December.

The euro zone 10-year yield fell to its lowest since the introduction of the euro in 1999 ahead of the ECB rate cut, and the benchmark 10-year U.S. Treasury yield to its lowest in more than 50 years.

Ten-year euro zone government bond yields subsequently picked up from their lows to 3.068 percent EU10YT=RR and the December Bund future FGBLc1 fell 30 ticks on the day, reversing early sharp gains.

(Additional reporting by Rebekah Curtis; Editing by Ruth Pitchford)