GLOBAL MARKETS-Wild week for markets set to end quietly

* Wall Street falls as China, European shares gain

* China central bank injects liquidity into market

* Oil rallies again after strong surge on Thursday

* U.S (Other OTC: UBGXF - news) . dollar rises on economic outlook as calm returns (Adds oil settlement prices)

By Herbert Lash

NEW YORK, Aug 28 (Reuters) - A volatile ride for global markets this week looked to end calmly on Friday even as lingering worries over Chinese economic growth and the Federal Reserve's plans to raise interest rates weighed on stocks, but oil rebounded sharply for a second day.

U.S. crude jumped more than 6 percent as a rally in gasoline prices and air raids in Yemen made traders scramble to cover short positions. U.S. crude has gained about 16 percent in two sessions, the second-largest two-day rise in 25 years if the day's gains hold.

Fed officials who are most anxious to raise rates said during an annual global central bankers' conference in Jackson Hole, Wyoming that continued financial market turmoil may cause the U.S. central bank to delay tightening monetary policy beyond September.

The Fed is waiting to see how data and markets unfold over the coming weeks before deciding whether to raise rates at its meeting in mid-September, Vice Chair Stanley Fischer told CNBC.

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

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

The move was the latest 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 acknowledged, 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.

U.S. STOCKS SLIP

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

The Dow Jones industrial average fell 66.98 points, or 0.4 percent, to 16,587.79. The S&P 500 slid 6.43 points, or 0.32 percent, to 1,981.23 and the Nasdaq Composite lost 2.91 points, or 0.06 percent, to 4,809.80.

Major European equity indices finished higher after a late-session rally, helping lift MSCI (NYSE: MSCI - news) 's all-country stock index 0.3 percent. The pan-European FTSEurofirst 300 index rose 0.34 percent to close at 1,435.13. The euro zone's blue-chip Euro STOXX 50 index gained 0.18 percent, but Germany's DAX shed 0.17 percent, putting it nearly 20 percent below a record high in April.

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.

U.S. Treasuries prices retreated from a one-week peak. Benchmark 10-year Treasuries notes fell 5/32 in price to yield 2.1842 percent.

German bond yields edged lower, defying the 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 climbed $2.49 to settle at $50.05 a barrel on Friday and U.S. crude rose $2.66 to settle at $45.22 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 0.53 percent at 96.118. The euro slipped 0.56 percent to $1.1180. Against the yen , the dollar rose 0.27 percent to 121.36. (Reporting by Herbert Lash and Lionel Laurent; editing by Clive McKeef, Meredith Mazzilli and Chizu Nomiyama)