World stocks climbed off four-week lows on Wednesday and the euro recovered some ground against the dollar as investors sought bargains in recently hard-hit markets.

The hunt for cheaper assets, however, was tempered by disappointing U.S. economic data and continuing concerns about the euro zone's struggle to control debt in its peripheral economies, particularly Greece.

Europe's top financial officials broke a taboo on Tuesday and acknowledged for the first time that Greece may have to restructure its debts, a move which could stoke Europe's sovereign debt crisis.

Germany and recently bailed-out Portugal were to auction bonds later in the day, providing a test of demand at both extremes of the euro zone economy.

World stocks as measured by MSCI were up 0.6 percent, bouncing off Tuesday's losses, which took the index to its lowest since April 18.

Europe's FTSEurofirst 300 <.FTEU3> gained around half a percent.

Investors have become more cautious in the past month faced with unanswered questions about slow U.S. growth, Chinese overheating and Europe's debt woes.

U.S. factory output slipped for the first time in 10 months in April as a shortage of parts from disaster-hit Japan crimped activity.

While many investors consider the overall outlook to be positive, those sort of signs have led to a pull back from risk.

It seems to me that we are going to be stuck in a trading range for a little while, said Mike Lenhoff, chief strategist at Brewin Dolphin.

Earlier, Japan's Nikkei <.N225> climbed 1 percent, helped by a weaker yen and hence better exporting prospects.

EURO CLIMBS

The euro rose against the dollar, recovering from a seven-week low earlier in the week, but wariness over Europe's sovereign debt problems kept investors nervous about piling up euro positions.

The euro is still in a correction phase after recent declines, said Hideki Amikura, a forex manager at Nomura Trust and Banking. It has the potential to advance toward $1.43-$1.44 on hopes for more buybacks by foreign investors.

The single currency gained 0.2 percent to $1.4263. It slumped to a seven-week low of $1.4048 on Monday.

German government Bunds fell ahead of Wednesday's auction. But core debt was still seen as benefitting from the questions over the euro zone's struggling periphery, following the first admission by a major policymaker that some form of restructuring was on the cards for Greece.

I don't think it's great for Europe at all, one trader said. It's an issue that's going to go on for some time and it's a support for Bunds.

(Additional reporting by Ana Nicolaci da Costa, Kirsten Donovan and Atul Prakash; editing by Patrick Graham)

Portugal Germany Japan Price