* Investors cut riskier assets after China share slide * Pan-European shares retreat 0.8 percent * Dollar, yen advance By Emelia Sithole-Matarise LONDON, Aug 19 (Reuters) - European and Asian stocks fell on Wednesday while government bonds and the dollar firmed on the back of a slump for Chinese shares and investors' concerns over the sustainability of the global economic recovery. The Shanghai composite index .SSEC slid 4 percent to a two-month closing low on disappointment that authorities were not taking steps to support the market amid increasingly heavy losses, rattling global markets. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, rose 0.3 percent to 79.176. The yen also rose broadly. It gained some 0.5 percent against the dollar to 94.23 yen JPY= and 0.7 percent against the euro to 132.88 yen EURJPY=R. "Chinese stocks were dumped into the close, and that provided an instant bid to the dollar, with everything coming off on the back of that," said Christian Lawrence, currency strategist at RBC Capital Markets. The pan-European FTSEurofirst 300 index fell 1 percent while U.S. stock futures SPc1 were also down almost 1 percent. Oil and metal prices and cyclical currencies like the Australian dollar also fell as the sell-off in China gathered pace. V-SHAPED RECOVERY HOPES WANING The sharp reversal in China has badly shaken confidence, even though some form of correction had been widely expected after a rally in share prices stretching back to early March. "It goes back to disappointing consumer sentiment figures in the U.S. last week," said Heino Ruland, strategist at Ruland Research, in Frankfurt. "There is no sign that we can expect a V-shaped global recovery and the realisation of this will take the heat out of the market. Earnings forecasts are still too high." Bank of Communications (3328.HK)(601328.SS), China's fifth-largest lender, will kick off first-half results for its financial sector on Wednesday, followed by two of the world's biggest banks by market value later in the week: Industrial and Commercial Bank of China (1398.HK)(601398.SS) and China Construction Bank (0939.HK)(601939.SS). U.S. Treasury and euro zone government debt prices rose, pushing their yields lower. The benchmark 10-year U.S. T-note yield was down seven basis points at 3.444 percent US10YT=RR while the 10-year Bund yield was about four basis points lower on the day at 3.262 percent EU10YT=RR. UK gilts got an extra lift but sterling fell broadly after minutes from the Bank of England's August meeting showed the Monetary Policy Committee was split on whether to up the amount of gilt purchases it makes by even more than it did. Six MPC members were in favour of the 50 billion pound ($82.33 billion) increase to 175 billion pounds, but three, including BoE Governor Mervyn King, wanted to bolster the programme by 75 billion pounds. [ID:nSP485184] (Additional reporting by Tamawa Desai, Brian Gorman and Kevin Plumberg in Hong Kong; editing by Patrick Graham)

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