* Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh
Metals surge, zinc at highest in a decade
* U.S. political uncertainty weighs on global share prices
* Dollar struggles, U.S. bond yields near two-month lows
* Investors wary as U.S., South Korea begin military drills
* Markets looking to Fed's c.bank gathering in Jackson Hole
* European shares dip for third day, Wall Street seen flat
By Marc Jones
LONDON, Aug 21 (Reuters) - World stocks struggled at a 5-1/2-week low on Monday, though metals dazzled with zinc at its highest in a decade, copper hitting a nearly three-year high and iron ore's gains in the last three sessions stretching to nearly 15 percent.
Traders were digesting the latest departure from Donald Trump's White House team, watching tensions around North Korea and waiting to see what the world's top central bankers would signal at the annual Jackson Hole gathering later this week.
Wall Street looked set for a steady start with only low key national activity data to distract investors from those bigger questions that had seen the S&P 500 drop below or close to a number of key technical levels on Friday.
European stocks clawed back most of an early 0.2 percent dip, as M&A activity helped shipping giant Maersk jump and the rally in metals sent Rio Tinto, BHP Billiton and Anglo American higher.
Zinc had hit its highest since October 2007 at $3,180.50 a tonne, bellwether industrial metal copper rallied to $6,593 a tonne, its highest since November 2014, and nickel, used in stainless steel, gained over 2 percent as it reached a 2017 peak.
China's iron ore futures soared more than 4 percent meanwhile, fueled by concerns of shortages and before curbs on futures purchases which are touted to come into force in the next few months.
It also came amid hopes for Chinese infrastructure spending and a potential boost down the road from electric cars, though some analysts cautioned moves may be speculative too.
"I'm looking at the prospect for the global economy and looking at the price of metals and there seems to be a significant disconnect between the two," said CMC markets strategist Michael Hewson.
"But it's certainly helping the mining sector, which has been beleaguered for quite some time."
In the currency market, the dollar remained hampered by Friday's latest departure from Trump's top team. This time it was chief strategist Steve Bannon, a driving force behind his nationalist and anti-globalization agenda.
Trump is due later to address a problem that vexed his two presidential predecessors. He will detail his strategy for the war in Afghanistan, America's longest military conflict, which is expected to included a modest boost to troop numbers.
The dollar fetched 108.970 yen, not far from Friday's four-month low of 108.605.
The euro was also in the doldrums, stuck at $1.1760 as it consolidated last week's biggest weekly decline in more than two months.
Investors are looking to European Central Bank chief Mario Draghi's comments later this week at a meeting of the world's central bankers in Jackson Hole, Wyoming. Sources told Reuters last week he would not deliver any fresh policy messages.
Federal Reserve Chair Janet Yellen's keynote speech will also be closely scoured for clues on its next move.
Comments last week from Fed officials suggested the stock market's steady rise, still low long-term bond yields and a sagging dollar, are strengthening the Fed's intent to raise interest rates again this year despite caution about weak inflation.
"It is pretty much a see-saw with the euro and the dollar at the moment, particularly ahead of Jackson Hole," said Societe Generale FX strategist Alvin Tan.
"The weight of euro positioning has finally stopped this advance we have seen over the last few months."
Oil markets steadied after big gains on Friday, which were triggered by cuts in oil rigs by U.S. drillers.
U.S. crude futures fetched $48.64 per barrel, while Brent futures were down fractionally at $52.69 per barrel.
In fixed income, the 10-year U.S. Treasuries yield stood at 2.181 percent, having slipped on Friday to 2.162 percent - its lowest since late June.
German Bunds ticked under 0.4 percent. Greece's government bond yields also dipped early on after Fitch became the second ratings agency to upgrade it to "Single B" status, marking another milestone in the debt-laden state's slow journey away from default territory.
(Additional reporting by Hideyuki Sano in Tokyo; Editing by Matthew Mpoke Bigg)