By Ian Chua

LONDON (Reuters) - Stock markets from Britain to China rose on Monday as cautious investors hunted for bargains after recent steep declines, while oil prices retreated from last week's record high.

Investors were keeping an eye on the three-day meeting of leaders of the Group of Eight rich countries to see if they send a message strong enough to reverse the course of record high oil prices and the dollar's long-term slide.

Mounting expectations the European Central Bank will not follow up with another interest rate rise after last week's well-flagged 25 basis point move to 4.25 percent also undermined the euro, which fell to a one-week low versus the dollar.

U.S. crude was at $143.59, down from last week's all-time high of $145.85 per barrel. The New York Mercantile Exchange did not issue an official Friday closing price due to the U.S. Independence Day holiday.

"Fundamentally the deteriorating economic outlook still makes for a difficult environment for equities short term, but clearly there is enough valuation support (for) a short term-rally," said Darren Winder, head of macro and strategy research at Cazenove in London.

The FTSEurofirst 300 index of top European shares rose 0.5 percent in morning trade, with Germany's DAX gaining 0.9 percent and London's FTSE climbing 0.4 percent. The FTSEurofirst 300 index is still down more than 20 percent this year.

Earlier, Japan's Nikkei rose nearly 1 percent, breaking its longest losing streak in more than half a century, while MSCI's measure of other Asian stock markets gained 0.4 percent.

China's main stock index surged more than 4 percent as funds bought a wide range of blue chips on the view that the market has finally found at least a short-term floor.

MSCI world equity index edged up 0.1 percent, steadying after four straight sessions of declines.

Despite the gains in equities, persistent concerns about the health of the financial sector, which is facing a global credit crunch, gave safe-haven government bonds a bid tone, pushing yields lower.

The 10-year Bund yield slipped 2 basis points to 4.476 percent, while the U.S. benchmark 10-year notes yielded 3.96 percent, down from about 3.98 percent in U.S. trade on Thursday.

DOLLAR UP AS G8 MEETS

The dollar rose 0.5 percent versus a basket of major currencies, extending last Friday's gains after last week's key U.S. employment data was not as bad as some had feared.

"If at all, comments from the G8 should be a bit dollar supportive as the focus of the market is very much on energy prices and the impact on inflation," Michael Klawitter, FX strategist, Dresdner Kleinwort, Frankfurt.

"A stable dollar would be one of the preconditions to stabilise the oil price (and) there is some expectation that the statement ... should hint at least at some general agreement that the dollar should not be allowed to weaken further."

Gold, hit by the stronger dollar, fell to $920.15 an ounce from $932.00 in London on Friday.