By Mike Dolan and Sebastian Tong

LONDON, June 12 (Reuters) - World stocks, oil prices and the euro fell on Friday after data showed euro zone industrial output plunged again in April and as traders eyed a meeting of finance ministers from the Group of Eight top economies.
Top-rated government bonds, which tend to benefit from economic weakness and financial stress, also stabilised after a torrid week. A successful auction of 30-year U.S. Treasury bonds late on Thursday helped repair investor sentiment.
Although overall trading ranges remained narrow, the euro zone production drop prompted the most significant moves of the European session.
The European Union's statistics office said production fell 21.6 percent in the 16-country area, exceeding the previous year-on-year record decline of 19.3 percent logged in March and economists' expectations of a 20.2 percent drop.
Month-on-month, production fell 1.9 percent, far more than the 0.4 percent dip expected by economists in a Reuters poll.
"The April industrial production data for the euro zone are very disappointing and raise concern that the region is lagging in terms of signs of the recession easing," said Howard Archer, economist at IHS Global Insight.
The data contrasts with more optimistic signs from Japan, where April output gained 5.9 percent month-on-month in the biggest monthly rise for more than half a century, and from China, where factory output rebounded more than expected in May.
"The euro zone economy will suffer, it will suffer more than the rest of the world, ergo my view that the euro will underperform for quite some time," said Maurice Pomery, managing director at Strategic Alpha in London.
By 1130 GMT, the euro fell 0.7 percent to a low of $1.4000 , according to Reuters data.
European stocks suffered too. The pan-European FTSEurofirst 300 was down 0.4 percent at 884.52 points.
LandesBank Berlin strategists told clients: "The risk is quite high that economic developments will not be able to keep pace with the ambitious expectations."
"After the over 40 percent rise in share prices since early March, further upside potential is limited."
The European retreats put a dampener on more buoyant Asian trade, where the upbeat Chinese economic data had earlier lifted regional shares to eight-month highs before they eased back later. MSCI's world equity index was down 0.36 percent by midsession in Europe.
Crude oil fell almost 1.5 percent as investors were wary the doubling of prices since February had overshot the recovery in the real economy.
"The risk of a massive price correction in the medium term is building up," Commerzbank said in a note on oil prices.

Investors are cautious ahead of the meeting later in the day of G8 finance ministers, who are expected to discuss so-called "exit strategies" from their super-easy fiscal and monetary policies if the recovery those policies were designed to trigger finally takes hold.
The Wall Street Journal reported that U.S. Federal Reserve officials are not likely to considerably increase purchases of U.S. Treasuries and mortgage-backed securities when they meet in late June.
"We've been swinging back and forth quite a bit this week. With the G8 in front of us, It may offer a good excuse not to engage too heavily in the market at the moment," said Dag Muller, technical analyst for currencies at SEB in Stockholm.
Emerging stocks, which have outperformed their global counterparts to rise nearly 40 percent this year, also sagged 0.2 percent.
Bunds regained some lost ground as yields on benchmark 10-year U.S. Treasuries backed down further from eight-month highs hit earlier this week.
A solid auction of 30-year U.S. debt eased oversupply fears and helped the September Bund futures rise 72 ticks.
"Risk aversion seems to be abating but people are still sitting on their hands. We have had better data and the U.S. Treasury auction was well received so that's given a bit of relief ... but people are still a bit uncertain about putting on too much risk," said a Nordic trader.
Emerging market spreads were 7 basis points wider to trade at 417 bps above Treasuries.

(Additional reporting by Peter Starck, Jan Strupczewski, Naomi Tajitsu and Sujata Rao; editing by Stephen Nisbet) (To read Reuters Global Investing Blog click on http://blogs.reuters.com/globalinvesting; for the MacroScope Blog click on http://blogs.reuters.com/macroscope; for Hedge Hub click on http://blogs.reuters.com/hedgehub) Keywords: MARKETS GLOBAL (sebastian.tong@thomsonreuters.com; +44 20 7542 8561; Reuters Messaging: sebastian.tong.reuters.com@reuters.net)

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