* Chinese stocks rebound 4.5 pct, lifting others
* Japan up 1.8 pct, Europe 1.3 percent
* Wall Street set for higher open
* Dollar slightly higher, yen slips
By Jeremy Gaunt, European Investment Correspondent
LONDON, Aug 20 (Reuters) - Chinese stocks rebounded sharply on Thursday, giving a fillip to global equities and fostering demand on foreign exchanges for higher-yielding currencies.
Wall Street looked set to open higher, following gains overnight that managed to shake off fears of a Chinese stock collapse after a surprising drop in crude oil stockpiles suggested an improving demand outlook.
World stocks as measured by MSCI <.MIWD00000PUS> were up 0.7 percent with more than 1 percent gains in emerging markets <.MSCIEF>, Europe and Japan.
"Markets are often dictated by state of mind, and one can't help but sense the growing feeling of optimism," said Brian Myers analyst at ODL Securities.
"Whilst economic data suggests that we are not out of the woods just yet, we are certainly walking with a bit more of a spring in our steps."
China has been a big worry in volume-thin August for investors, registering large losses that have seen the Shanghai Composite Index <.SSEC> swing wildly and even drop into bear market territory, 20 percent below its recent peak.
The index gained 4.5 percent on Thursday for its second largest gain this year.
The rebound nudged the index just above the closely watched five-day moving average, now at 2,905 points. Analysts said a convincing move above that level could indicate the index had stabilised after the recent sell-off.
The more immediate impact, along with Wall Street's gains, was to spread some comfort across other bourses.
Japan's Nikkei average <.N225> climbed 1.8 percent to bounce back from a three-week closing low. The pan-European FTSEurofirst 300 <.FTEU3> gained 1.3 percent.
HIGH YIELD
Japan's yen slipped, while higher-yielding currencies crept up as the recovery in global shares prices stoked some risk appetite in thin trade.
The yen tends to flourish when demand for higher-risk assets falls.
"We had a comeback in equities in Asia overnight ... that has eased some of the tensions that have seen the yen in particular do well," said Chris Gothard, currency strategist at Brown Brothers Harriman in London.
The dollar rose close to a quarter of a percent to 94.25 yen
Euro zone government bond prices were flat. The two-year
yield