GLOBAL MARKETS-Goldman earnings cool stock rally, lift dollar

* Goldman Sachs earnings dampen stock rally

* Wall St set for losses but world stocks near 13-mth highs

* Japan gains 1.8 percent, Europe up 0.3 percent

* Dollar erases losses to stand slightly stronger

By Jeremy Gaunt, European Investment Correspondent

LONDON, Oct 15 (Reuters) - Goldman Sachs dampened buoyant investor sentiment on Thursday with earnings that failed to meet the most extreme expectations, reversing gains on world stock markets and pushing the dollar higher.

Wall Street looked set for a negative start.

The investment bank actually posted relatively robust, better-than-expected quarterly earnings but disappointed some by not reaching the wilder forecasts being bandied around the market.

"There were all sorts of rumours flying around that the results were going to be even stronger than consensus, so the initial reaction is that they've slightly disappointed despite beating estimates significantly," said Rupert Armitage of Shore Capital Stock Brokers,

Citigroup also reported better-than-expected results, but it was a loss.

World stocks as measured by MSCI <.MIWD00000PUS> slipped from positive territory but remained close to 13-month highs.

Japan's Nikkei <.N225> closed up 1.8 percent and the FTSEurofirst 300 <.FTEU3> was flat after rising to a fresh one-year high.

Bank of America Merrill Lynch said on Wednesday their monthly survey of fund managers had shown increasing bullishness but that it had not reached the level yet that risked a sharp counter swing.

"Equities remain in a sweet spot: fears of a double-dip have receded, while worries about inflation and monetary tightening are not imminent enough to prevent an October surge in risk appetite," Michael Hartnett, the bank's chief global equity strategist, said in a note. [ID:nLE169760]

DOLLAR REVERSES

The dollar hit a 14-month low against a basket of major currencies before the Goldman results, but then reversed.

The currency currently suffers when risk appetite rises because of differing prospects for interest rates.

The euro hit a 14-month high of $1.4967 , according to Reuters data. It was later at $1.4842.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up a quarter of a percent after falling to a 14-month low <.DXY>.

Euro zone government bonds lost ground.

Ten-year yields were up 3 basis points at 3.270 percent and two-year yields were up 1 basis point at 1.367 percent.

(Additional reporting by David Brett; editing by Patrick Graham) (jeremy.gaunt@thomsonreuters.com; +44 207 542 1028; Reuters Messaging: jeremy.gaunt.reuters.com@reuters.net))