GLOBAL MARKETS-European stocks bounce back on Italy relief, China growth worries linger
* STOXX50E up 0.7 pct as Italy relief boosts European shares
* Italian bank stocks rise after S&P keeps rating unchanged
* China data shows slowing industrial profits growth
* EM stocks rise after Bolsonaro wins Brazil election
* Crude prices tumble as investors price in easing growth
By Helen Reid
LONDON, Oct 29 (Reuters) - Concern over China's slowingeconomy dented U.S. stock futures and kept world stocks underpressure on Monday although European shares climbed thanks toencouraging earnings reports and relief that Italy dodged aratings downgrade.
The euro, however, fell to a session low after a seniorparty source said German Chancellor Angela Merkel would not seekre-election as party chairwoman after bruising losses for herChristian Democrats in a regional election in Hesse. Germany's DAX was up 0.7 percent by 0929 GMT whilethe leading index of euro zone stocks rose 0.5percent, boosted by a weaker euro.
Italy's FTSE MIB led the market with a 1.5 percentgain after Italian bond yields fell sharply to a one-week lowfollowing Standard & Poor's decision to leave Italy's sovereignrating unchanged, sparking relief there was no ratingsdowngrade. This also boosted Italian bank stocks up 2.7percent.
Despite gains on Monday, investors remained wary of bettingthe farm on a turnaround in risk.
"The only way I can summarize the core sentiment among theEuropean investors I met is something like 'pretty grim'," wroteErik Nielsen, group chief economist at UniCredit, in a note toclients.
The MSCI world equity index, tracking sharesin 47 countries, managed a 0.1 percent gain. The index is down9.3 percent so far this month and has shed $6.7 trillion inmarket capitalisation since its January peak.
Overnight losses in Asia were largely led by China'sblue-chip index which tumbled more than 3.3 percent.
Chinese data underscored worries of a cooling economy asprofit growth at its industrial firms slowed for the fifthconsecutive month in September due to ebbing sales of rawmaterials and manufactured goods. S&P 500 and Dow Jones Industrial futures declined 0.2 to 0.3percent after the figures, reversing gains of as much as 0.4percent earlier.Global financial markets have been hit by a range ofnegative factors from an intensifying China-U.S. trade conflictto tensions in Europe over Italy's budget and tighteningmonetary policy.
Many indices are already in official correction territoryamid heightened worries over corporate earnings and globalgrowth.
Analysts have been downgrading their estimates for Europeanearnings at the fastest pace since Feb 2016, and weak resultsfrom internet giants Amazon and Alphabet hurt U.S. stocks at theend of last week.
BOLSONARO WIN BOOST EMERGING STOCKS
Emerging markets stocks were a bright spot,gaining 0.1 percent in their first rise in five sessions afterfar-right candidate Jair Bolsonaro won the second-round runoffin Brazil's presidential election.
Brazil-exposed stocks in Europe climbed as investors cheeredthe win. Blackrock's Latin American Investment Trust London-listed shares gained 7.4 percent while a Germany-listediShares MSCI Brazil ETF climbed 6.6 percent.
"Our initial assessment for the Bolsonaro administration isthat it will have a pro-business stance, focused on enhancingthe country's competitiveness," said UBS analysts.
In FX, the dollar index rose 0.2 percent to 96.553after gaining 0.7 percent last week.
The euro fell 0.2 percent to near a two-month low at$1.1381. Sterling fell 0.2 percent, holding near atwo-month trough of $1.2775 ahead of Britain's annual budget duelater on Monday.
Finance minister Philip Hammond will likely urge his dividedConservative Party to get behind the government's push for aBrexit deal, or put at risk a long-awaited easing of austerity.
In commodities, oil also reversed early gains to dip ongrowing worries about Chinese growth. U.S. crude fell 58cents to $67.01 per barrel and Brent crude slid 71 centsto $76.89.
Spot gold prices edged lower as the dollar firmed.
(Reporting by Helen ReidEditing by Raissa Kasolowsky)
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