GLOBAL MARKETS-China concerns hit stocks, gold rebound continues

* MSCI world share index down for 3rd day after weak China data

* Wall Street expected to hold ground

* European shares steady, safe-haven bonds make ground

* Japan's Nikkei tumbles 2.4 pct, Thai stocks fall to 16-month low

* Gold climbs to near three-week high, copper at two-week low

By Marc Jones

LONDON, Jan 6 (Reuters) - Concerns over a slowdown in China's economy triggered a third day of falls for world shares on Monday and extended a spritely rebound in gold to leave it at a near three-week high.

Figures showing that China's services sector slowed sharply last month added to a stack of disappointing data from the world's second largest economy over the last week and left Wall Street eyeing another cautious start. SPc1 DJc1

MSCI's world stock index .MIWD00000PUS , which tracks 45 countries, was at a three-week low following Beijing's hefty overnight drop and a rocky start to 2014 for Tokyo's Nikkei

.N225 which saw its biggest fall in over two-months.

European moves were far more muted, however, as a raft of data showing the divergence between top economies Germany and France, but also the gradual recoveries in Italy and Spain, cushioned the impact.

News Search ID:nL9E8E505D News Search ID:nL9E8E5058 News Search ID:nL9E8E5059

Ahead of the start of U.S. trading, the pan-regional FTSEurofirst 300 .FTEU3 had fought back to neutral territory as London's FTSE .FTSE , Paris's CAC 40 .FCHI and Frankfurt's Dax .GDAXI all recovered from early tumbles.

"You could argue we have had some mixed news on the economic front, but I think in general the trend in the numbers is an improving one globally," said Robert Parkes, an equity strategist at HSBC.

"The China is data is relevant but of course so are the euro zone PMIs that we have seen... We don't believe we are going to see a hard landing in China."

Despite the recovery in stocks there was still plenty of evidence of the caution the China data had fostered among investors.

Safe-haven European bonds DE10YT=TWEB were holding gains, copper CMCU3 - highly-attuned to China's fortunes - remained firmly under pressure, while in the currency market the dollar

.DXY hovered near a four-week high.

CHINA

The culprit for the moves was growth in the China's huge services sector which slowed sharply in December to its lowest point since August 2011. News Search ID:nB9N0JK02G

The figures also came hot on the heels of a similar official survey on Friday and two other PMIs last week showing factory activity also soured.

China's CSI300 share index .CSI300 sagged 2.3 percent, hitting a five-month low and MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS slid 0.8 percent to a three-week trough.

The Chinese index is now down 3.9 percent since the start of the year, adding to last year's 7.6 percent decline.

"The focal point of the Asian markets is more on Chinese growth and on Chinese political situation and how it's going to pan out this year" said Guy Stear, Asian credit and equity strategist at Societe Generale, as opposed to worries much of the world has about a reduction in U.S. central bank stimulus.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Global services PMIs: Href="Link">http://link.reuters.com/dyh85s

Asia manufacturing PMI: Href="Link">http://link.reuters.com/maz35s

Thai baht: Href="Link">http://link.reuters.com/jev65v

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

GOLD RUSH

The main beneficiary of the Asian tensions remained gold as it continued to rebound from last year's worst run in over three decades.

It was sitting at $1,238 an ounce as afternoon dealing gathered momentum in London, it's highest in three weeks and on course for a fifth day of back-to-back gains. Oil bounced too after four days of falls, with Brent at $107.76 a barrel.

"Weaker equities will have more of an impact on gold prices than a stronger dollar," said Helen Lau, an analyst at UOB-Kay Hian Securities in Hong Kong. "It is all about allocation by funds."

On the opposite side of the China coin was the South Korean won KRW=KFTC as it hit a near six-week low. Ongoing political uncertainty in Thailand also left the baht THB=TH at a near four-year trough and Thai stocks .SETI at a 16-month low.

News Search ID:nL3N0KF051

With Japanese equities taking a beating, the yen got some respite against the dollar, up 0.3 percent at 104.55 yen JPY= . And with the ECB's first meeting of the year looming on Thursday the euro edged up from a one-month low to $1.36. EUR=

Wednesday's December Fed meeting minutes and then Friday's non-farm payrolls data could determine the dollar's next move. They should give further clues on how quickly the Fed is likely to wind in its huge stimulus programme in the coming months.

"With the Fed having set the tapering process in motion, it would likely take a fairly significant miss to derail tapering expectations and push yields significantly lower from their year-end levels," analysts at BNP Paribas wrote in a note.

(Additional reporting by Dominic Lau in Tokyo; Editing by Toby Chopra)

((marc.jones@thomsonreuters.com)(+44)(0)(207 542 9033)(Reuters Messaging: marc.jones.thomsonreuters.com@reuters.net))

 
((To read Reuters Global Investing Blog click on  
http://blogs.reuters.com/globalinvesting;  
for the Macro Scope Blog click on  
http://blogs.reuters.com/macroscope;  
for Hedge Fund Blog Hub  
click on http://blogs.reuters.com/hedgehub) 
((For the state of play of Asian stock markets please click on:   ))

Keywords: MARKETS GLOBAL/