GLOBAL MARKETS-Stocks rebound, shrugging off volatile and weak China

* European, U.S. stocks shrug off China fall

* UK GDP, U.S. Fed in focus

* Commodities under pressure

By Jamie McGeever

LONDON, July 28 (Reuters) - Stocks rose on Tuesday, with Europe snapping a five-day losing streak as investors shrugged off further weakness in commodity markets and Chinese shares to focus on more encouraging merger activity and earnings.

Oil languished at four-month lows and China's benchmark stocks fell for a third straight day, but developed market equities and commodity currencies recovered.

In early European trading the FTSEuroFirst 300 index of leading European shares was up 0.5 percent at 1,537 points .

Germany's DAX, France's CAC 40 and Britain's FTSE 100 were all up around 0.5 percent too, while S&P futures pointed to similar gains at the open on Wall Street.

"The latest count on our earnings monitor shows earnings-per-share beats at 76 percent," said Jim Reid, market strategist at Deutsche Bank (Xetra: 514000 - news) .

Among the main movers, RSA Insurance Group surged 12.9 percent after Zurich Insurance (Xetra: ZFI1.DE - news) said it was weighing up a bid for the British group with a market capitalization of 4.4 billion pounds ($6.85 billion).

Earlier, MSCI (NYSE: MSCI - news) 's broadest index of Asia-Pacific shares outside Japan ended the day 0.2 percent higher after falling nearly 1 percent early on, touching its lowest level since July 9.

Tokyo's Nikkei ended 0.1 percent lower.

The main China indexes fell again, although by nowhere near as much as Monday's 8.5 percent plunge. The Shanghai market benchmark closed 1.7 percent lower.

Since hitting a peak in early June, Chinese shares have gone through a roller-coaster ride with main indexes plummeting by a third in less than a month before rebounding by a quarter, only to then have their biggest one-day fall since 2007 on Monday.

Authorities in Beijing said they will step up efforts to shore up the market, something which could help soothe nerves in Western markets as well.

"The recent debasement seems to have revived hopes of having the central bank putting more money on the table, not only to support the stock prices but to prevent stock price volatility from hitting the real economy," said Ipek Ozkardeskaya Market Analyst, London Capital Group.

OIL SLIDES

The main economic indicator for investors on Tuesday will be Britain's first snapshot of economic activity in the second quarter. Economists expect gross domestic product to have expanded by 0.7 percent, up from 0.4 percent in the first quarter.

The U.S. Federal Reserve begins its two-day policy meeting. No move on rates is expected this week, so close attention will be paid to whether Fed chair Janet Yellen signals September or December is the most likely date for "liftoff".

The dollar was higher against many of its key rivals, including the euro and yen, with the consensus for the first U.S. rate hike in almost a decade still revolving around September.

The euro was down a quarter of a percent at $1.1060, slipping back from a two-week high of $1.1129 overnight, and the dollar was up a third of one percent against the yen at 123.60 yen.

The greenback was under pressure against commodity currencies such as the Australian and New Zealand dollars , however, which were up around 0.5 percent and 1.0 percent, respectively.

Sterling was steady at $1.5545 ahead of Q2 GDP, the first of all G7 GDP reports.

Oil struggled at four-month lows after the Chinese stock market crash fuelled worries the world's biggest energy consumer may cut back and as more evidence emerged of a global crude supply glut.

U.S. crude was down more than 1 percent at $46.83 a barrel, its lowest since late March, while Brent was down almost 2 percent at $52.40.

The price of copper, heavily influenced by demand from key consumer China, recovered slightly to $5,213 a tonne on the London Metal Exchange. On Monday it fell to $5,177 a tonne, a six-year low.

The broader Thomson Reuters CRB commodities index also hit a six-year low overnight.

Bond yields edged higher, with the 10-year U.S. Treasuries yield up 2 basis points at 2.25 percent and similar rises in UK and German yields. (Reporting by Jamie McGeever; Editing by Mark Heinrich; To read Reuters Global Investing Blog click on http://blogs.reuters.com/globalinvesting; for the MacroScope Blog click on http://blogs.reuters.com/macroscope; for Hedge Fund Blog Hub click on http://blogs.reuters.com/hedgehub)