* China stocks slump 6 percent on eve of G-20 summit in
Shanghai
* Volatile crude oil prices seesaw, though remain above lows
* European bourses bounce 1.3 percent after 4 pct drop in 2
days
* Dollar claws back ground against yen, sterling edges up
By Marc Jones
LONDON, Feb 25 (Reuters) - European shares bounced after two
days of falls on Thursday and sterling steadied having been
pounded all week by 'Brexit' fears, though a 6 percent drop in
Chinese stocks fed concerns over its giant economy.
Wall Street looked set for a modest rise when it opens, as
weekly jobless claims numbers and an early burst of reassuring
manufacturing data soothed some of the pain of Wednesday's first
contraction in services sector figures since 2013.
Europe's FTSEurofirst 300 .FTEU3 had been due a rebound
having lost almost 4 percent since Tuesday and it came through
to the tune of almost 2 percent as risk appetite returned.
An overnight rise in oil helped lifted commodity firms
.SXEP almost 4 percent, and solid results from British bank
Lloyds LLOY.L and French insurer AXA AXAF.PA gave a much
needed boost to the beleaguered financials sector. .SX7E
"At the moment the markets just feel like a chicken with its
head cut off," said Saxo Bank's head of FX strategy, John Hardy.
"Everything is swinging around on the daily moves on oil.
There was a pretty remarkable comeback by Wall Street yesterday
despite some weak data so it feels like it's a bit dodgy till we
get past the G20 meeting."
The earlier slump in Shanghai underscored the sense of
caution over China ahead of Friday's G20 meeting there. Pressure
is on the G20 leaders to get the global economy back on track
and calm markets after one of the rockiest starts to a year on
record.
The IMF called on Wednesday for those countries that still
have money available to help boost growth and
Chinese officials, speaking as G20 delegates started to arrive,
moved to ease fears about another sharp drop in the yuan.
"We do recognise the risk the global economy faces," China's
Deputy Finance Minister Zhu Guangyao said at a conference. "We
also understand how important it is to correctly communicate
with the market."
Britain's sterling grabbed a much needed breather at $1.3985
GBP=D4 , having plunged 5 percent since early this month on
fears that a public vote on June 23 could see it become the
first country to quit the 28-member European Union.
Dealers said there were also signs of downward pressure
building on the euro ahead of next month's European Central Bank
meeting which is expected to see the bank cut rates again.
Euro zone long-term inflation expectations fell to record
lows on Thursday, though there was a glimmer of hope as ECB data
showed a small tick up in bank lending to firms.
With doubts also over whether the Fed can raise rates in
March or indeed at all this year the dollar was
struggling to make much headway at $1.1017 per euro EUR=EBS .
Speaking on CNBC St. Louis Fed President James Bullard added
to that sense as he said the U.S. central bank's December rate
hike may have spurred the recent sell-off in equity markets.
"I worry that we somehow signal that we are on a freight
train path," Bullard added, saying December's rise had been
misinterpreted as a commitment to carry on hiking this year.
OIL
The earlier slump in China, which was its biggest loss in a
month, was coupled with another dip in the yuan though it failed
to boost safe-haven plays as it has tended to do recently, with
the yen JPY= and Swiss franc CHF= both falling against the
dollar. /FRX
Crude oil prices were also unusually inactive. Brent LCOc1
was down 0.4 percent at $34.27 per barrel while U.S. West Texas
Intermediate (WTI) crude CLc1 was down 0.8 percent from late
Wednesday levels at $31.87 per barrel. O/R
Oversupply is currently so large that 1 to 2 million barrels
of crude are produced every day above what actually used by the
global economy.
"The basic overriding position in the oil market at the
moment is that the global production exceeds global demand by
quite a wide margin," said Ric Spooner, chief market analyst,
CMC Markets.
Wall Street futures ESc1 pointed to a steady start for
U.S. markets. .N In Asia overnight, MSCI's broadest index of
Asia-Pacific shares outside Japan .MIAPJ0000PUS ended down 0.5
percent following the China lurch lower .SSEC .CSI300 .
Japan's Nikkei stock index .N225 ended up 1.4 percent as
bulls got the upper hand as the yen moved away from its recent
highs against the dollar.
One of this year's best performing assets, gold XAU= ,
meanwhile erased early losses and rose about 0.7 percent to
$1,237 an ounce, within sight of a one-year high of $1,260.60
reached on Feb. 11. GOL/
"The technical picture seems a bit changed and at the same
time we don't expect rate hikes from the Fed anymore ... we
expect gold to reach $1,300 by the end of the year," ABN Amro
analyst Georgette Boele said.