* MSCI World index steady; T-Bill yields perk up * Gold on course for third week of gains * Reflation trade in question as COVID-19 cases rise * Treasury rally stalls: tmsnrt.rs/3dXKQYM LONDON/SYDNEY, July 9 (Reuters) - World stocks steadied, Treasury yields bounced and the dollar held firm on Friday as markets took a cautious breather in the face of fresh concerns over the pace of the world’s economic recovery from COVID-19. Markets have been roiled this week as a rise in cases of the Delta coronavirus variant globally crimped risk appetite and led to a flight to safety as some bet the post-pandemic reflation trade is over for now. “There seems to be the gradual realisation for many that the vaccination programmes alone won’t prove enough to get economies back to their pre-Covid normality, with cases at the global level now ticking up again as the more infectious delta variant spreads across the world,” said Deutsche Bank analyst Jim Reid. The MSCI World index was unchanged in early European trading, as gains among many regional bourses helped offset overnight weakness in Asia. The STOXX Europe 600 index was up 0.8%. Overnight in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan had briefly touched two-month lows before paring losses. U.S. stock futures pointed to a slightly higher open on Wall Street, up 0.2%. Analysts said an accumulation of events have triggered a turn in sentiment rather than a single catalyst. Fears central banks will choke economic recovery by tightening policy in their efforts to rein in inflation, the rapid spread of the Delta variant and still low rates of vaccination have darkened the outlook. In Australia, stay-at-home orders were introduced in Sydney to help combat the spread of the virus. Vietnam also introduced new restrictions, with record deaths reported across South Asia. After dipping sharply over the early part of the week, yields on 10-year Treasury notes bounced on Friday, up around 4 basis points to 1.334%, although still nowhere close to 2021 highs of 1.776% reached in March. A reading on Thursday on the number of Americans filing new unemployment claims added to views that the job market recovery from the COVID-19 pandemic continues to be choppy. In currencies, the safe haven yen hovered near a one-month high at 110.01 per dollar. The euro dipped to $1.1834. That left the dollar index, which tracks the greenback versus a basket of six currencies, flat at 92.443. Gold, another safe haven asset, was on track for its third straight weekly gain. It was last up 0.1% at $1,803 an ounce. Oil prices added to overnight gains. Brent crude was up 29 cents to $74.41 a barrel. U.S. crude added 41 cents to $73.35 per barrel. Additional reporting by Sujata Rao; Editing by Shri Navaratnam and Timothy Heritage Our Standards: The Thomson Reuters Trust Principles.