* World shares on longest losing streak since COVID-19 outbreak * European stocks claw back from worst day of 2021 * U.S. Treasury yields touch fresh Feb lows * FX reflation trades falter * U.S. dollar close to early-April high * Global asset performance tmsnrt.rs/2yaDPgn LONDON, July 20 (Reuters) - Global shares staunched a sell-off on Tuesday, but U.S. Treasury and German bond yields slipped to fresh five-month lows as a reminder that investors remained worried the spread of the Delta coronavirus variant could derail the economic recovery. After their worst sell-off this year on Monday, Europe’s STOXX 600 added 0.2%, down from highs earlier in the session due to positive corporate earnings and production updates from miners. In the United States, e-mini futures for the S&P 500 index were up 0.4%. The positive moves followed more selling in Asia, with MSCI’s gauge of Asia Pacific stocks outside Japan falling 0.6% and Japan’s Nikkei 225 hitting a six-month low, down nearly 1%. China deleveraging risks hurt property stocks and the broader market for a second day, causing a plunge in shares of heavily indebted developer China Evergrande Group. The Hang Seng Index dropped 0.8% while China’s blue chip CSI300 Index was 0.1% lower. MSCI’s broadest gauge of global shares was 0.2% lower, extending its longest losing streak in nearly 18 months. “The reality is that this price action has become somewhat self-fulfilling as the myopic investor sentiment and positioning are forced to re-assess,” said James Athey, investment director at Aberdeen Standard Investments. “I fear the equity selling isn’t over yet, and if I am right, Europe will be the worst place to be, given the index is value dominated – and thus very cyclical.” Riskier assets globally have come under pressure recently as many countries struggle to contain the outbreak of the fast-spreading Delta virus variant, raising fears that further lockdowns and other restrictions could upend the worldwide economic recovery. Stocks on Wall Street fell as much as 2% on Monday, with the Dow posting its worst day in nine months as COVID-19 deaths increased in the United States. In a separate gauge of investor risk appetite, bitcoin fell below $30,000 for the first time since June 22. “The market was too quick in January-March to remove COVID from the equation, to look at the very short term implications of reopening and think inflation would be explosive. They didn’t want to focus on the longer term implications,” said Ludovic Colin, senior portfolio manager at Vontobel Asset Management. In a sign of lingering fears of the spread of the Delta variant, the Aussie dollar/Swiss franc cross, a favourite proxy in currency markets for economic recovery bets, fell to its lowest level since December 2020 at 0.6714 francs, according to Refinitiv data. Against a basket of its rivals, the U.S. dollar strengthened widely on Tuesday and was close to an early-April high of 93.041 hit in the previous session. U.S. Treasury yields extended Monday’s searing rally. The 10-year yield reached 1.164%, a reading last seen in February. The spread between the U.S. 10-year and 2-year yield remained near February lows, signalling investor doubts about the growth outlook. In Europe, Germany’s 10-year yield, the benchmark for the euro zone, briefly fell to -0.427%, breaching a new lowest level since February and was last at 0.418%. Oil prices turned negative again after slumping around 7% in the previous session due to worries about future demand and after an OPEC+ agreement to increase supply. Brent crude slipped 0.3% to $68.44 a barrel. The U.S. crude contract for August delivery, which expires later on Tuesday, was down 0.3% at $66.15 a barrel. Spot gold was up 0.2% $1,816.01 per ounce after hitting a one-week low of $1,794.06 in the previous session. Reporting by Tom Arnold in London and Kane Wu in Hong Kong; additional reporting by Sujata Rao, Andrew Galbraith; Editing by Michael Perry, Jacqueline Wong and Giles Elgood Our Standards: The Thomson Reuters Trust Principles.