GLOBAL MARKETS-Metals shine but world stocks stuck near 5-1/2-week low

* Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh

* Metals surge, zinc at highest in a decade

* U.S. political uncertainty weighs on global share prices

* Dollar struggles, U.S. bond yields near two-month lows

* Investors wary as U.S., South Korea begin military drills

* Markets looking to Fed's c.bank gathering in Jackson Hole

* European shares dip for third day, euro sags

By Marc Jones

LONDON, Aug 21 (Reuters) - World stocks struggled at a 5-1/2-week low on Monday, though metals dazzled with zinc at its highest in a decade, copper hitting a nearly three-year high and iron ore's gains in the last two sessions stretching to 5 percent.

Traders were digesting the latest departure from Donald Trump's White House team, watching tensions around North Korea and waiting to see what the world's top central bankers would signal at the annual Jackson Hole gathering later in the week.

European stocks fell for a third session, though M&A activity helped shipping giant Maersk jump and the rally in metals sent Rio Tinto (Hanover: CRA1.HA - news) , BHP Billiton (NYSE: BBL - news) and Anglo American (LSE: AAL.L - news) higher.

Zinc hit its highest since October 2007 at $3,180.50 a tonne, bellwether metal copper rallied to $6,593 a tonne, its highest since November 2014, and nickel, used in stainless steel, gained over 2 percent to a 2017 peak.

It came amid hopes for Chinese infrastructure spending as stocks at Chinese ports fall for a fourth week and a potential boost down the road from electric cars, though some analysts cautioned moves may be speculative too.

"I'm looking at the prospect for the global economy and looking at the price of metals and there seems to be a significant disconnect between the two," said CMC markets (LSE: CMCX.L - news) strategist Michael Hewson.

"But it's certainly helping the mining sector, which has been beleaguered for quite some time."

In the currency market, the dollar remained hampered by Friday's latest departure from U.S. President Trump's top team. This time it was chief strategist Steve Bannon, a driving force behind his nationalist and anti-globalisation agenda.

The dollar fetched 109.24 yen, not far from Friday's four-month low of 108.605.

The euro was also in the doldrums, stuck at $1.1750 as it extended last week's biggest weekly decline in more than two months.

Investors are looking to European Central Bank chief Mario Draghi's comments later this week at a meeting of the world's central bankers in Jackson Hole, Wyoming. Sources told Reuters last week he would not deliver any fresh policy messages.

Federal Reserve Chair Janet Yellen's keynote speech will also be a key focus.

Comments last week from Fed officials suggested the stock market's steady rise, still low long-term bond yields and a sagging dollar are strengthening the Fed's intent to raise interest rates again this year despite caution about weak inflation.

"People focus on inflation but in the Fed's minutes policymakers spend a lot of time discussing whether bond yields are too low or asset prices are too high. If Yellen questions market stability, markets will expect a tighter policy," said Hiroko Iwaki, senior bond strategist at Mizuho Securities.

Oil markets steadied after big gains on Friday, which were triggered by a drop in crude inventories.

U.S. crude futures fetched $48.46 per barrel, down 0.1 percent, while Brent futures were down 0.2 percent at $52.63 per barrel.

In fixed income, the 10-year U.S. Treasuries yield stood at 2.1852 percent, having slipped on Friday to 2.162 percent - its lowest since late June.

German Bunds were steady at 0.4 percent. Greece's government bond yields dipped early after Fitch became the second ratings agency to upgrade it to "Single B" status, marking another milestone in the debt-laden state's slow journey away from default territory.

(Additional reporting by Hideyuki Sano in Tokyo; Editing by Dale Hudson)