GLOBAL MARKETS-Apple results weigh on Wall St; oil cuts some losses

* Oil back above $50 after another surprise U.S. crude draw

* Banking, mining, weigh on European shares

* Declining iPhone sales push Apple (NasdaqGS: AAPL - news) stock down as much as 3.7 pct

* Sterling recovers after Carney's comment (Adds U.S. market open; changes dateline to New York; updates throughout)

By Hilary Russ

NEW YORK, Oct (HKSE: 3366-OL.HK - news) 26 (Reuters) - Apple's results weighed on U.S. equities on Wednesday after the technology giant posted its first annual revenue decline since 2001, offsetting a boost from Boeing (NYSE: BA - news) 's strong profit, while oil prices recovered from steep early losses.

Shares (Berlin: DI6.BE - news) of Apple, the world's most valuable public company , fell as much as 3.7 percent - set for their worst day in six months - after the company said sales of its flagship iPhones fell for the third quarter in a row.

"The earnings season, on balance, has been much better than expected, said Art Hogan, chief market strategist at Wunderlich Equity Capital Markets.

"But the glaring difference this quarter is that companies which meet or beat expectations get rewarded modestly while those that miss are seeing a more severe reaction."

The Dow Jones industrial average rose 46.74 points, or 0.26 percent, to 18,216.01, the S&P 500 lost 0.66 points, or 0.03 percent, to 2,142.5 and the Nasdaq Composite dropped 15.39 points, or 0.29 percent, to 5,268.01.

Excluding Apple, earnings are expected to rise 2.5 percent.

Disappointing results and forecasts from some other major U.S. companies continued to weigh on European and Asian stocks.

Mixed results from Europe's banking sector and declines in mining and energy shares helped push the pan-European STOXX 600 index down 0.38 percent.

But while Europe remained negative, oil cut some losses, with Brent back above $50 a barrel, after the U.S. government reported a drawdown in domestic crude stocks that extended a trend of unexpected inventory declines this autumn.

Brent crude futures were down 44 cents, or 0.87 percent, at $50.35 a barrel by 11 a.m. (1500 GMT). They earlier touched a session low of $49.65, the weakest since Sept. 30.

U.S. crude futures were down 27 cents at $49.69, after earlier dropping to $48.87, the lowest since Oct. 4.

MSCI (Frankfurt: 3HM.F - news) 's broadest index of Asia-Pacific shares outside Japan slid 0.95 percent, while Japan's Nikkei reversed earlier losses to close up 0.15 percent as the yen pulled back.

CARNEY EFFECT

In currency markets, sterling recovered from Monday's lows after Bank of England (BoE) governor Mark Carney said in a speech the central bank could not ignore the effect of sterling's slide on inflation.

This increased expectations that policymakers would leave rates unchanged next week, rather than cut them as many had expected.

Sterling rose 0.4 percent against the dollar to $1.2235, coming off Monday's trough of $1.2081, which was the lowest level since the Oct. 7 "flash crash".

The euro, which had slid to a 7 1/2-month low of $1.0851 on Tuesday, was up 0.28 percent to $1.0916.

With (Other OTC: WWTH - news) investors looking ahead to U.S. third-quarter gross domestic product data on Friday, the dollar index, which tracks the greenback against a basket of six global peers, fell 0.19 percent to 98.530.

It hit its highest level since Feb. 1 on Tuesday as traders saw a better than 78-percent chance of an interest rise hike by the Federal Reserve in December, according to CME Group (Kuala Lumpur: 7018.KL - news) 's FedWatch tool.

The dollar extended modest gains against the yen, hitting a session high of 104.44 yen.

For Reuters new Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets

(Additional reporting by by Abhinav Ramnarayan in London; Ethan Lou in New York and Yashaswini Swamynathan in Bengaluru; Editing by Nick Zieminski)