World stocks fell from this week's one-year high on Tuesday as investors grew cautious ahead of major third-quarter U.S. corporate earnings, while risk-hungry investors drove the Australian dollar to a 14-month peak.

Key results due this week include Intel , Goldman Sachs and General Electric . Intel is expected to beat forecasts with its results later on Tuesday but some worry that corporate spending might not rebound until mid-2010.

According to Thomson Reuters data, the quarterly earnings contraction rate for the three months ending September -- based on reported and estimated earnings -- stands at 24.7 percent, compared with the contraction rate of 27.3 percent in the second quarter.

Earnings are expected to bounce back strongly to growth later this year with an estimated growth rate of a whopping 193.4 percent in the fourth quarter.

There may be some corrections in this market, but you're better off being in the market, for further gains, said Bernard McAlinden, investment strategist at NCB Stockbrokers. MSCI world equity index <.MIWD00000PUS> fell 0.1 percent, after hitting its highest level since October 2008 on Monday. The index has gained more than 28 percent this year, recouping nearly two thirds of losses from last year.

The FTSEurofirst 300 index <.FTEU3> fell 0.3 percent, dragged by falls in banks.

Emerging Asian stocks <.MIAPJ0000PUS> hit a fresh 14-month high. Broader emerging stocks <.MSCIEF> were steady on the day.

According to Thomson Reuters data, out of 32 S&P 500 companies which reported results, 78 percent beat expectations, compared with 13 percent which missed forecasts.

The current Q3 earning season may drive the equity market into a liquidity induced overdrive. Real money and even the more aggressive hedge fund community have missed the equity market rally and have not invested strongly enough to catch up with benchmark indices, BNP Paribas said in a note to clients.

Unless there is a shock, such as a major credit event, the share market will move sharply higher which will keep the dollar under pressure.

U.S. crude oil rose 0.3 percent to $73.50 a barrel, having hit a seven-week high near $74 on Monday.

The September bund future was steady ahead of this week's record issuance of up to 35 billion euros.

RISK ON IN FX

The Australian dollar rose as high as US$0.9094.

Earlier this month Australia became the first G20 country to raise interest rates after the collapse of Lehman Brothers in September 2008. The central bank signaled more rate hikes were on the cards.

The New Zealand dollar also stayed near a 14-month high against the U.S. dollar after the country's retail sales rose higher than expected in August, reinforcing the view that the central bank might move away from its easing bias after its longest recession in more than 30 years.

The dollar <.DXY> rose 0.1 percent against a basket of major currencies while the U.S. currency rose 0.3 percent to 90.04 yen.

(Additional reporting by Brian Gorman; editing by Chris Pizzey)

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