(Adds oil, gold settlement prices)
* Stocks surge after worst day since October
* Gold prices fall, yen weakens as safe-haven appeal slips
* Safe-haven demand strong after risk assets sell off
* Oil prices rise after five-day decline
By Herbert Lash
NEW YORK, Jan 28 (Reuters) - Global equity markets rebounded in a broad rally on Tuesday and some safe-haven assets lost a bit of their appeal as investors took a less pessimistic view of the potential economic fallout from China's coronavirus outbreak.
Gold fell and the Japanese yen eased against the dollar, but risk aversion in currency markets persisted, with the Australian dollar leading losers and the greenback strengthening to an eight-week high against a basket of six rivals.
In a possible warning of a future weak economy, strong gains in Treasuries this week led key parts of the U.S. yield curve to reinvert, a reliable indicator in the past that a recession in the United States will follow in a year or two.
Gains in technology and financial shares led Wall Street to recoup some losses from Monday's selloff, the worst rout in about four months that was sparked by the coronavirus outbreak and worries over its near-term impact on growth.
Major European and U.S. stock indexes rebounded around 1% as President Xi Jinping said China was sure of defeating a "devil" coronavirus that has killed 106 people.
The World Health Organization's director-general said he is confident in China's ability to control and contain the spread of a new coronavirus, China's Ministry of Foreign Affairs said.
Chinese markets will remain closed until next week, but a 0.5% overnight drop in Tokyo's Nikkei was more modest than Monday's thumping. Other Asian markets that were open rallied.
"History shows us as we look back at several different examples that these viral outbreaks tend to be short lived," said Candice Bangsund, a global asset allocation portfolio manager at Fiera Capital in Montreal.
While markets are likely to gyrate in the short term, the global economy will resume the improving growth it started to exhibit late last year, Bangsund said.
"The economy could be ripe for a sharp snapback or a V-shaped recovery once we find out when this is contained and when the outbreak is indeed brought under control," she said. "We maintain the global economy will come back to life."
MSCI's gauge of stocks across the globe gained 0.79%, while its emerging market index lost 0.05%.
Shares on Wall Street also surged. The Dow Jones Industrial Average rose 277.99 points, or 0.97%, to 28,813.79. The S&P 500 gained 41.19 points, or 1.27%, to 3,284.82 and the Nasdaq Composite added 145.03 points, or 1.59%, to 9,284.34.
Oil futures edged up after falling for five days following the recovery in equities and talk that Organization of the Petroleum Exporting Countries and its allies might tighten the market amid fears the coronavirus could weigh on oil demand.
Brent futures settled up 19 cents at $59.51 a barrel, while U.S. West Texas Intermediate (WTI) crude settled up 34 cents at $53.48.
The yield on the benchmark 10-year U.S. Treasury note bounced off three-month lows after a key part of the yield curve briefly inverted for the first time since October.
The yield fell as low as 1.57% overnight, the lowest since Oct. 10, before the 10-year note fell 13/32 in price to lift its yield to 1.6476%.
An inverted curve, when longer-dated yields fall below shorter-maturity ones, has been a fairly reliable signal that a U.S. recession will follow one to two years later.
Euro zone government bond yields bounced off three-month lows to rise for the first time in over a week after U.S. consumer confidence exceeded expectations to hit its highest level since August.
Traders awaited the outcome of a two-day meeting of Federal Reserve policymakers, which started on Tuesday. The market consensus is that the central bank will keep interest rates unchanged at between 1.5% and 1.75%.
The dollar index rose 0.06%, with the euro down 0.02% to $1.1014. The yen weakened 0.22% versus the greenback at 109.14 per dollar.
U.S. gold futures settled down 0.5% at $1,569.8 an ounce.
(Reporting by Herbert Lash; Editing by Bernadette Baum and Lisa Shumaker)