* FTSE 100 retreats, European stocks flat
* Oil down 1 pct, sterling steadies after Brexit shock
* PBOC willing to let yuan fall further this year
* YTD asset performance: http://reut.rs/2938RL0
By Vikram Subhedar
LONDON, June 30 (Reuters) - Global stocks were set for their
worst monthly performance since January, with renewed concerns
over global growth forcing European shares .STOXX and oil
prices onto the back foot again following two positive sessions.
The MSCI All-Country World index .MIWD00000PUS was little
changed on the day, but is set to end the month down 2.5
percent, its worst month since a troubled start to the year.
Worries that a weaker Chinese yuan could spark deflation,
seen as a key reason for the worst beginning to the year for
global stocks, were reignited after Reuters reported that
China's central bank was willing to let the currency fall
further.
"Since the beginning of the year investors have faced a
series of macro changes to the investment landscape," said Sean
Darby, chief global equity strategist at Jefferies, adding that
Britain's decision to leave the European Union last week was
only the most recent shock to investor confidence.
The two-day selloff in the aftermath of last week's vote
wiped more than $3 trillion off the value of global stocks.
"No doubt global growth will take a short term hit, but it
is not going to result in a credit crisis," said Darby.
Bond markets see Brexit as another significant blow to the
world economy with German and Japanese benchmark 10-year
government debt yields both falling to historic lows below zero
over the past week.
On stock markets, European shares .STOXX were flat, while
the FTSE 100 .FTSE was off 0.1 percent in early trading with
financials the biggest drag on both indexes.
Shares of UK and European banks .SX7P , a centre of concern
since Britain shocked global financial markets on Friday, have
been the hardest hit during the recent sell-off and are the
worst performing sectors this year in their respective markets.
In currencies, sterling GBP=D4 was up 0.2 percent, putting
distance between a 31-year trough of $1.3122 touched on Monday.
It has still lost more than 6 percent in the quarter.
The euro, another casualty in the days after Brexit,
fetched$1.1111 after reaching $1.0912 on Friday, its lowest
since March.
Crude oil prices retraced some of their gains from
Wednesday's sharp rally as fears over strike outages in Norway
abated.
Brent crude LCOc1 fell 0.9 percent at $50.10 a barrel
after jumping more than 4 percent overnight, thanks to a
larger-than-expected drawdown in U.S. crude inventories. O/R
Oil has mostly recovered what it lost after the Brexit
shock. For the quarter, Brent has risen 26 percent on hopes that
declining production in some countries would ease a global glut.
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Asset performance in 2016: http://reut.rs/2938RL0
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(Editing by Alexander Smith)