* Yuan stability reassures investors
* Dollar gains broadly, Wall Street seen higher
* Oil, emerging market currencies remain weak
By Jamie McGeever
LONDON, Aug 17 (Reuters) - European stocks rebounded from
last week's heavy selloff on Monday and the dollar rose broadly,
with investors reassured by stability in China's yuan exchange
rate after it was fixed slightly higher for the second day
running.
Asian markets were more volatile, however, and emerging
market currencies and oil prices were anchored near historic
lows.
The FTSEuroFirst 300 index of leading shares was up 0.8
percent at 1,540 points .FTEU3 , clawing back some of last
week's 3 percent decline - its biggest loss in six weeks.
Wall Street was expected to open higher SPc1 .
Germany's DAX was up 0.6 percent .GDAXI and France's CAC
40 up 0.7 percent .FCHI . Britain's resource and
commodity-heavy FTSE 100 .FTSE , however, was 0.2 percent
lower.
"European equities, based off results thus far, are showing
slightly stronger earnings than Q1, with financials leading
earnings growth," said Brenda Kelly, head analyst at London
Capital Group.
Alstom (PARIS:ALSO) shares rose as much as 7 percent after two people
familiar with the matter told Reuters General Electric (NYSE:GE) GE.N
was expected to secure European Union approval for a proposed
12.4 billion euro bid for its power business. ID:nL5N10P48J
Shares in Hennes & Mauritz HMb.ST advanced 2.4 percent
after the fashion retailer reported higher sales.
Earlier in Asia, MSCI's broadest index of Asia-Pacific
shares outside Japan .MIAPJ0000PUS fell 0.8 percent, adding to
last week's loss of 2.6 percent suffered after Beijing's
devaluation of the yuan buffeted global financial markets and
fanned concerns about China's economy.
SMALL IN JAPAN
The yuan fell more than 4 percent at one point last week,
pulling down riskier assets including emerging currencies
globally amid fears the devaluation would spark a global
currency war. But China slowed the pace of the currency's drop,
and on Monday fixed it higher for the second day in a row.
Emerging currencies continued to struggle. The rouble hit a
six-month low RUB= , Malaysia's ringgit held near a 17-year low
MYR= and Turkey's lira fell to its weakest on record TRY= .
With the big focus whether the Fed raises interest rates as
early as next month, the dollar was the major winner in currency
markets.
"With reduced volatility, fears on passthrough from the
China devaluation to Fed policy should subside and this may see
focus shift back to the situation in the United States," wrote
Todd Elmer, head of Citi's G10 strategy in Singapore.
The euro fell a third of one percent to $1.1072 EUR= .
Euro investors also weighed up the growing likelihood that
the Greek government will call a confidence vote following a
rebellion among lawmakers from the ruling Syriza party over the
country's new 86 billion euro bailout deal. ID:nL5N10S0DZ
The dollar gained 0.2 percent against the yen JPY= after
Japan's economy shrank in the second quarter.
The 0.4 percent contraction wasn't as large as the 0.5
percent fall expected, but concerns that the third quarter may
see only mild improvement are rekindling expectations of further
monetary easing by the Bank of Japan. ID:nL3N10R0KA
In bond markets, the benchmark 10-year U.S. Treasury yield
slipped two basis points to 2.18 percent US10YT=RR .
Crude oil, another market churned last week by China's shock
currency move and its potential impact on demand for
commodities, continued to struggle in the wake of global
oversupply concerns.
U.S. crude CLc1 was down 1.8 percent at $41.73 a barrel,
within reach of a six-year trough of $41.35 struck on Friday.