GLOBAL MARKETS-Wild week for markets set to end quietly

* Wall Street, European shares fall as China gains

* China central bank injects liquidity into market

* Oil rallies again after strong surge on Thursday

* US dollar rises on economic outlook as calm returns (Adds U.S (Other OTC: UBGXF - news) . market open, byline, dateline; previous LONDON)

By Herbert Lash

NEW YORK, Aug 28 (Reuters) - A white-knuckle ride for global markets this week looked set to end with a whimper on Friday as lingering worries over Chinese economic growth and the Federal Reserve's plans to raise interest rates weighed on stocks, but oil rebounded on a strengthening U.S. economy.

The market turmoil should not delay the Fed from raising interest rates at least once, as the global equities rout and China's slowdown have had little effect on the U.S. economy, St. Louis Fed President James Bullard told Reuters in an interview.

Bullard said he still favored hiking rates at the Fed's next policy-setting meeting in mid-September, though he added the U.S. central bank would be hesitant to do so if markets were still volatile at that time.

Chinese stocks jumped more than 4.0 percent for a second day in a row after authorities said pension funds managed by local governments will start investing 2 trillion yuan ($313.05 billion) as soon as possible in stocks and other assets.

The move is the latest policy response by Chinese authorities, including the People's Bank of China (HKSE: 3988-OL.HK - news) , to shore up the economy after they cut rates, lowered reserve requirements and injected liquidity into the banking system.

"It (Other OTC: ITGL - news) is inconceivable to us, with $3.65 trillion in foreign currency reserves, the Chinese government and the PBOC would sit there and watch the second largest economy in the world slide into recession or worse," said Phil Orlando, chief equity strategist at Federated Investors in New York.

"I don't know if we're completely out of the woods at this point," Orlando acknolwedged, but with the U.S. economy growing steadily the question now is what the Fed plans, as fears of a hard landing in China should subside after its policy response.

US STOCKS STEADY

Wall Street stocks opened lower, a sign investors were reluctant to take big positions going into the weekend, after a week marked by the equity market's worst day in four years on Monday and the biggest two-day gain ended Thursday since the financial crisis.

Most major U.S. and European equity indices were lower, with the exception of MSCI (NYSE: MSCI - news) 's all-country stock index and the main British index, the FTSE 100, which was lifted by oil companies and rising crude prices. Both indices rose about 0.2 percent.

The Dow Jones industrial average fell 64.78 points, or 0.39 percent, to 16,589.99. The S&P 500 slid 4.37 points, or 0.22 percent, to 1,983.29 and the Nasdaq Composite lost 8.75 points, or 0.18 percent, to 4,803.96.

But concerns about a weaker global economic outlook have not dissipated, putting a damper on European equities.

"The problems have not gone away. The movement of currencies is still bubbling away underneath," said Paul Chesterton, a trader at brokerage Peregrine & Black.

The pan-European FTSEurofirst 300 index slipped 0.24 percent to 1,426.74. The euro zone's blue-chip Euro STOXX 50 index fell 0.45 percent, while Germany's DAX shed 0.84 percent, nearly 20 percent below a record high in April.

U.S. Treasuries prices rose, with benchmark yields retreating from a one-week peak as losses on Wall Street revived some safe-haven buying for government debt.

Benchmark 10-year Treasuries notes rose 3/32 in price to yield 2.1559 percent.

German bond yields edged lower, defying a sudden surge in oil, as data showed consumer prices in Europe's biggest economy had been weighed down by falling energy costs.

Oil saw its biggest one-day bounce since 2009 on Thursday, with North Sea Brent and U.S. light crude rising more than 10 percent. U.S. crude is on track for its first weekly gain in nine weeks, ending its longest losing streak since 1986.

Brent rose $1.70 to $49.26 a barrel. U.S. crude rose $1.99 $44.55 a barrel.

The U.S. dollar gained for a fourth straight session, buoyed by calmer financial markets and generally positive U.S. economic data that supported the notion that the world's largest economy was on a stable growth path.

The dollar index was up 0.26 percent at 95.858. The euro slipped 0.19 percent to $1.1222.

(Reporting by Herbert Lash and Lionel Laurent; editing by Gareth Jones and Clive McKeef)