* European Stoxx 600 down 0.1 pct
* German Bund yield falls to lowest in 2-1/2 years
* Kiwi dollar slides as central bank flags possible rate cut
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Tom Wilson
LONDON, March 27 (Reuters) - Global equity markets were flat on Wednesday, hoping central bank action in the world's biggest economies could temper some of the slowdown in world growth, even though bond yields continued to flag recessionary fears.
European shares STOXX which broke four straight days of losses on Tuesday, held steady though bank shares got a one percent lift from comments by European Central Bank governor Mario Draghi who signalled more assistance for banks via a cheap loans programme.
German 10-year yields, already below zero percent since Friday, fell further in negative territory, while the U.S. bond yield curve remained inverted - three-month bills US3MT=RR are yielding more than 10-year bonds - the key signal of recession dampened appetite for risk.
The U.S. yield curve inversion, which has preceded every U.S. recession for the last 50 years, triggered a sharp stock selloff last week. The drop in yields picked up pace after the U.S. Federal Reserve signalled a halt to its rate increases. got a reminder of global growth risks after Chinese data showed industrial profits shrank the most since late-2011 in the first two months of the year. That came after lacklustre economic data on Tuesday from Germany and the United States.
However, MSCI's all-country world equity index .MIWD00000PUS , which tracks shares in 47 countries, was down around 0.1 percent while Chinese mainland shares bounced almost one percent as expectations deepened of more central bank stimulus .SSEC . view is that reflation story remains on track. We do expect the (Chinese) government to come to the rescue and provide some respite," said Justin Onuekwusi, portfolio manager at Legal and General Investment Management.
"It feels to me that markets had priced in a lower-for-longer (interest rate) environment even before central banks. They had come a long way very quickly and now they are taking a bit of a breather. Global growth overall looks reasonably healthy, despite the slowdown," he added.
Most market players agree recession fears were real but saw no clear sign of a huge slowdown, especially with interest rate rises receding. Draghi too said the euro area's economic soft patch did not necessarily foreshadow a serious slump and the bank could further delay rate hikes if necessary. economic forecasts, including our own, are such that the second half of the year should see a cyclical pickup in activity - but the market is pricing something different," said Peter Schaffrik, head of European rates strategy at RBC Capital Markets.
Earlier, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS nudged up 0.1 percent while Wall Street was set for a firmer open, futures signalled
BRUISED KIWI
New Zealand's central bank joined its peers in the United States and Europe by turning dovish - it flagged a possible interest rates cut, sending the kiwi dollar 1.6 percent lower to its lowest in 2-1/2 weeks.
The move also weighed on the Australian dollar.
"The market was taken by surprise by the dovish tone," Thu Lan Nguyen, an analyst at Commerzbank (DE:CBKG) said of the Reserve Bank of New Zealand. "Most central banks have turned dovish. Even those that hiked interest rates did it with a very cautious outlook on rates."
The dollar index versus a basket of six major currencies was up 0.1 percent at 96.745 .DXY , building on modest gains overnight.
Questions over Brexit also limited moves for sterling GBP= , with investors awaiting fresh signs of Britain's plan to leave the European Union.
Prime Minister Theresa May will address Conservative Party lawmakers, possibly to indicate a timetable for her departure, as she tries to win support for her twice-rejected Brexit deal as parliament prepares to vote on a variety of possible options.
Oil prices were mixed, with Brent futures up 0.2 percent extending the previous session's rise, but gains were kept in check amid growing fears over the impact of a global economic slowdown on demand.
In emerging markets, there were renewed concerns over Turkey and Argentina where currencies have fallen sharply in recent days TRY= ARS= . The lira liquidity squeeze has sent overnight swap rates on lira to almost 500 percent.
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