By Marc Jones
LONDON (Reuters) - World shares climbed to a near one-month high and oil and government bonds slipped on Tuesday, helped by receding expectations of U.S.-led military action against Syria and after better-than-expected Chinese data.
Riskier assets saw a strong start in Europe after Monday's comments from U.S. President Barack Obama that Russia's plan to put Syrian chemical weapons under international control could be a breakthrough in the crisis. They were followed by upbeat industrial and retail figures from China.
Asian shares ended at a 3-month high and the feel-good factor continued in Europe where early gains of 0.6 - 1 percent on London's FTSE <.FTSE>, Germany's Dax <.GDAXI> and Paris's CAC 40 <.FCHI> pushed the FTSEurofirst 300 <.FTEU3> up 0.6 percent.
Oil fell to $113 a barrel, its lowest in two weeks, while safe-haven U.S. and German government bonds and gold and other precious metals were also back-pedaling.
"What we are seeing is being driven by the tensions in Syria being watered down a bit and a strong performance in the Asian and U.S. markets overnight," said Lee Curtis, a sales trader at City Index in London.
"We had clients buying into the market first thing after the Chinese data, and they continue to hold their longs (bets on further rises) as well so they seem pretty bullish."
Russia's proposal to work with Damascus to put its chemical weapons under international control could avert planned U.S. action although Obama said he will still continue efforts to convince politicians to back military action.
Lower oil prices are usually a particularly positive development for Asia, a region that relies heavily on imports for its energy needs.
MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> rose 1.1 percent, extending Monday's 1.3 percent gain to reach highs not seen since early June.
Tokyo's Nikkei <.N225> closed 1.5 percent higher, adding to Monday's 2.5 percent rally as news that Tokyo had won the right to host the 2020 Olympic Games bolstered optimism for a lasting economic recovery.
Upbeat Chinese industrial output and retail sales data on Tuesday added to growing evidence that its recent economic slowdown may have bottomed out.
A run of encouraging factory activity data from China, Europe and the United States has suggested the global economy as a whole is gaining a firmer footing.
In a slight twist to this narrative, sentiment for hard-hit emerging markets, continued to find support from last week's disappointing U.S. jobs data which has added to the debate surrounding the Federal Reserve's plans to scale back stimulus.
A Reuters poll on Monday showed economists generally expect the Fed to announce a reduction in its massive $85 billion monthly bond-buying program by a very modest $10 billion.
The MSCI emerging equities index <.MSCIEF> was at a three-month high as the day's 1.1 percent rise took its rally over the last nine trading sessions to almost 9 percent.
Still, this may only be a short-term bounce, warned Societe Generale strategist Benoit Anne.
"I don't buy the argument that the global emerging market correction is over. Outflows have been robust over the past few weeks and are showing no signs of reversal," he wrote in a report.
The cooling Syria tensions and the better China data helped the dollar shrug off some of its recent sluggishness, though it remained near a 1-1/2 week low against a basket of major currencies <.DXY>, having fallen 1 percent since Friday.
Adding to the uncertainty San Francisco Federal Reserve Bank President John Williams said on Monday he hasn't made up his mind yet over whether to support a reduction in Fed bond purchases.
The euro also continued to recover from a mild selloff last week. The common currency was steady at $1.3255, keeping close to a 1-1/2 week peak of $1.3281 scaled on Monday.
The dollar fared better against the yen, which sagged on Monday as the Nikkei rallied. The Japanese currency has tended to move inversely to the Nikkei this year.
(Editing by Jeremy Gaunt)