Global stocks struggled near a 1-1/2 week low on Friday despite a pledge by the Group of 20 countries to keep emergency economic stimulus in place until a durable recovery is secured, helping underpin government bonds.

Weak U.S. housing data on Thursday and plans by world central banks to scale back infusions of U.S. dollars into their banking system kept investors worried.

There are concerns about the sustainability of the economic upturn as it is only in its infancy, said Nick Stamenkovic, bond strategist at RIA in Edinburgh.

The fact that some of the short-term liquidity is being removed is to some extent maybe weighing on the equity market, which seems to be running out of steam, and that is clearly providing a more government bond supportive environment.

The MSCI all-country world stock index <.MIWD00000PUS> fell 0.5 percent to 284.81, having earlier plumbed 284.44 -- a low last seen on September 15.

The FTSEurofirst 300 index <.FTEU3> of top European shares shed 0.4 percent with Germany's DAX <.GDAXI> sliding 0.5 percent.

The MSCI world stock index is down 1.8 percent so far this week and on track for the biggest weekly decline since the week of July 12. It is however still up 25 percent year-to-date and not far off a near one-year peak of 292.79 reached on Wednesday.

Despite an eight-week streak of outflows from safe haven money market funds being broken, equity funds took in $5.42 billion in the week to September 23, with emerging market equity funds having their biggest week of inflows since early June, fund tracker EPFR Global said in a note.

Emerging shares <.MSCIEF>, which earlier this week hit a 12-month high, were down 0.2 percent, having also hit a 1-1/2 week low earlier.

DOLLAR SOFT, BONDS GAIN

In currency markets, the dollar was a touch weaker against a basket of major currencies. The euro was up 0.1 percent at $1.4672, not far off a one-year high above $1.48 set on Wednesday.

The (G20) is making clear that stimulus will stay in place until a recovery is sustainable, said Michael Klawitter, senior currency strategist at Commerzbank in Frankfurt, adding that this suggested that interest rates, including those for the dollar, would remain low for a while yet.

The embattled sterling remained an open target after Bank of England's Mervyn King said on Thursday that a weak currency was helping the domestic economy. After dropping 1.8 percent on Thursday, the pound fell a further 0.3 percent to $1.6004.

Underpinned by weakness in stocks, government bond prices held firm, keeping yields under pressure. The U.S. 10-year yield edged down 1 basis point to 3.370 percent, while the German equivalent, the euro zone's benchmark, slipped 2 basis points to 3.284 percent.

U.S. crude oil gained 18 cents to $66.06 a barrel after having tumbled more than 4 percent to an eight-week low the previous day when an unexpected fall in U.S. home sales in August fueled fears about the pace of economic recovery in the world's top oil consumer nation.

(Additional reporting by Naomi Tajitsu in London and Kevin Plumberg in Hong Kong; Editing by Toby Chopra)

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