GLOBAL MARKETS-Wall Street eyes rebound as China jitters persist

* Wall Street to bounce, Europe recovers as roller-coaster ride continues

* China stock indexes give up early gains despite rate cuts

* Demand for high quality government debt starts to ebb

* Oil rises but commodities hover near multi-year lows

By Marc Jones

LONDON, Aug 26 (Reuters) - Wall Street was expected to open almost 2 percent higher and Europe staged a fight-back on Wednesday, as traders tried to shake off fears about China's slowing economy and stocks collapse that is wreaking havoc in global markets.

Europe's main bourses, which had surged on Tuesday after China cut interest rates, clawed their way back towards positive territory having been down as much as 2 percent earlier.

China's key share indexes had attempted to move higher several times during Asian trading only to be slapped back by waves of selling, reflecting investors' views that much more support was needed from the government and the central bank.

Despite a late struggle, the CSI300 index closed down 0.6 percent and the Shanghai Composite Index ended off 1.3 percent for fifth straight day in the red as Beijing also dished out another round of trading bans.

Copper, often considered a proxy for Chinese and global economic activity because of its extensive use, also led another broad-based slide in industrial metals as a 2.5 percent tumble left it back near 6-year lows.

"The root of this is concern that growth in China may be a lot lower than what the market had thought," said Michael Bolliger, head of emerging market asset allocation at UBS Wealth Management in Zurich.

"They made further announcements yesterday but the market does not appear fully convinced, it has not distracted people from the fears about the economy."

But there was some signs of calm beginning to return. The U.S. S&P 500 was expected to see a 1.8 percent bounce when Wall Street reopens, having slumped more than 3 percent in the last hour of trading on Tuesday.

The CBOE Market Volatility Index was still elevated at 36, indicating significant uncertainty, but the "fear index" as it is known was well below the previous day's 6-1/2 year peak of 53.3.

Currency markets also looked to be settling back into their pre-'great fall of China' pattern.

The dollar regained traction against both the yen and euro with traders waiting on the a flurry housing market, consumption and goods data.

It was slightly off its highs of the day against the yen at 119.50 but was having plenty of success against the euro, shoving it back to $1.1414 from over $1.15 as one of the ECB's top policymakers also lent a helping hand.

"Developments in the world economy and commodity markets have increased the downside risk in achieving the sustainable inflation path towards 2 percent," ECB board member Peter Praet told reporters, stoking bets of more QE.

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China's volatile markets http://link.reuters.com/myh35w

China PMIs http://link.reuters.com/zut45w

Global assets in 2015 http://link.reuters.com/dub25t

European bourses in 2015 http://link.reuters.com/pap87v

Currencies vs dollar http://link.reuters.com/tak27s

World interest rates: http://link.reuters.com/xyb96s

Oil prices http://link.reuters.com/beb23v

Commodities performance http://link.reuters.com/rac73w

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ILLIQUID

Fixed income markets were active with investors starting to back out of safe-haven government debt and cash again after plenty of morning buying. The yield on benchmark U.S. 10-year Treasuries climbed to 2.1135 percent from 2.0837 percent earlier. It was close to 2.50 percent barely a month ago.

China's downturn and global market turmoil have also created fresh uncertainty over whether the U.S. Federal Reserve will begin raising interest rates this year.

German 10-year bond yields -- the euro zone benchmark -- also limped back above 0.70 percent, having hit 0.51 percent when the China fears had sent markets into a tailspin on Monday.

Despite China's struggles, Asia had also shown some signs of stabilisation after its recent lurches.

Japan's Nikkei and Korea's KOPSI were among the bright spots, with the former rising 3.2 percent as the yen weakened. The latter jumped 2.6 percent in its biggest jump in two years on hopes of possible government measures.

Although the relapse by industrial metals kept the 19-commodity Thomson Reuters/Core Commodity CRB Index close to lows not seen since 2003, there were some mixed signals in those markets too.

Oil nudged higher with Brent crude futures last at $43.40 per barrel, more than a dollar above 6-1/2-year low of $42.23 on Monday. U.S. crude also ticked up to 39.40

Gold, meanwhile, was another traditional safe-haven assets to lose ground, as it dipped 0.3 percent to $1,129 an ounce.

Michael Hasenstab, Franklin Templeton's bond fund manager, said he continued to see investment opportunities amid the turmoil currently racking financial markets.

"We expect economic growth in China to moderate, but not experience a hard-landing," he said, adding it was an inevitable normalization for an economy of its giant size.

"As such we continue to maintain a very short duration, and see opportunity in the current period of volatility," he said.

(Additional reporting by Sujata Rao in London, Saikat Chatterjee in Hong Kong; Editing by Giles Elgood)