* European shares rebound 0.8 percent, world stocks up 0.2 pct
* Markets relieved at no further U.S.-North Korea tensions
* Dollar rises 0.5 pct versus yen, up 0.25 pct against basket
* U.S. equity futures signal stronger Wall Street open
LONDON, Aug 14 (Reuters) - World stocks rose on Monday, attempting to recover after fears of a U.S.-North Korea nuclear standoff drove them to the biggest weekly losses of 2017, while the dollar too rose off four-month lows it had hit against the yen.
European shares bounced after falling nearly 3 percent last week, with the pan-European STOXX 600 up 0.7 percent following on from a 0.9 percent jump in MSCI's index of Asia-Pacific shares outside Japan.
Those gains were led by bounces in Australia, Hong Kong and South Korea while MSCI's world index rose 0.2 percent.
U.S. stock futures rose 0.6 percent, suggesting a higher open later in the day.
"The risk aversion has stabilised and investors have gotten used to the North Korea situation a little bit - as long as it doesn't escalate further," said Daniel Lenz, a strategist at DZ Bank in Frankfurt.
Last week's losses - and yen gains - were sparked by a war of words between Pyongyang and Washington after U.S. President Donald Trump warned North Korea it would face "fire and fury" if it threatened the United States .
That prompted North Korea to say it was considering plans to fire missiles at the U.S.-held Pacific island of Guam.
While North Korea's Liberation Day celebration on Tuesday to mark the end of Japanese rule could see tensions rise again, markets are relieved that the weekend had passed without more rhetoric. U.S. officials also played down the likelihood of a nuclear conflict with North Korea.
Tokyo shares failed to partake in the region's gains however, slipping 1 percent to three-month lows even after data showing robust 1.1 percent second quarter growth in Japan, the sixth straight quarter of expansion.
That was due to worries over the potential impact of the yen's recent surge against the dollar .. The Japanese currency, which firmed around 1.4 percent last week, tends to benefit during times of geopolitical or financial stress as Japan is the world's biggest creditor nation. Japanese investors also repatriated cash held overseas.
The greenback rose 0.5 percent to 109.70 yen after slipping to 108.720 on Friday, its weakest since April 20. Against a basket of currencies it firmed 0.2 percent, rising off last week's 10-day lows.
"As long as the geopolitics ease, we look for dollar/yen to gradually grind higher, back above the 110.00 level, along with gently rising U.S. yields," ING Bank analysts told clients.
U.S. 10-year yields inched higher after falling on Friday to six-week lows following data showing that U.S. consumer prices rose just 0.1 percent last month, below economists' forecast of a 0.2 percent gain.
Euro zone bond yields also rose, with investors interpreting the robust Japanese data as a sign that the global economy is indeed on the mend. While Japan is not expected to dismantle its stimulus programme any time soon, analysts reckon that signs of global recovery gives euro zone and U.S. central banks a reason to start rolling back some of their asset purchases.
The yield on Germany's 10-year government bond , the benchmark for the euro zone, was up 4.5 bps to 0.43 percent, a move mirrored by most other euro zone debt.
Earlier, Chinese markets were largely unfazed by a slew of activity data from China which was softer than forecast, though still largely solid.
The world's second-largest economy had been widely expected to lose a bit of steam in coming months after a surprisingly strong first half. But economists do not expect a hard landing, with the government keen to ensure stability ahead of a Communist Party leadership reshuffle in the autumn.
However, the weak Chinese data hit oil prices, with Brent crude futures down 35 cents lower at $51.74 a barrel.
(Additional reporting by Shinichi Saoshiro and Abhinav Ramnarayan; Editing by Toby Chopra)