LONDON (Reuters) - Federica Pellegrini rebounded from the disappointment of missing a medal in the 400 meters freestyle final by setting the fastest qualifying time in the 200 freestyle heats at the London Olympics on Monday.

The Italian finished a disappointing fifth in the 400m final on Sunday after going into the event as the reigning world champion and world record holder but made a better start to her defense of the 200 gold medal she won in Beijing four years ago.

Racing in the lane next to American teenager Missy Franklin, Pellegrini won her morning heat in one minute 57.16 seconds, the fastest time overall.

Allison Schmitt, who won the silver medal in the 400, was second best in 1:57.33 with Franklin next at 1:57.62.

"It felt awesome. I definitely didn't expect to be that fast this morning," Franklin said.

"It is a very stacked event, no matter what happens it will be a great semi-final and final."

Camille Muffat of France, who won the 400 gold medal, was 12th overall. The top 16 swimmers qualified for the semi-finals later on Monday, with the fastest eight from the semi-finals advancing to Tuesday's final.

"I couldn't sleep (last night)," said Muffat. "I would open the drawer, take out my medal and say 'oh yeah, it's true, I won'.

"One is what I wanted, two, I never thought possible. A medal of any color would be something."

(Reporting by Julian Linden; Editing by Greg Stutchbury)