By Marc Jones
LONDON (Reuters) - World shares climbed to a near one-month high and oil slipped with benchmark government bonds on Tuesday after the risk of U.S.-led military action against Syria receded and Chinese data proved stronger than expected.
Riskier assets rallied 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. The rally was spurred by upbeat industrial and retail figures from China.
Equity markets were performing particularly strongly and Wall Street was expected to add 0.6-0.7 percent to the previous session's 1 percent jump when trading resumes.
MSCI's world index, which tracks 45 countries, was already on course to chalk up its longest run of daily gains since December as a 1.2 percent jump in European shares followed a 3-month high for Asian stocks.
"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 on Monday he will keep trying to convince politicians to back military action.
Analysts warned it could be only a pause in the tensions but a Russian media report that Syria had accepted the plan further stimulated risk appetite.
Oil accelerated its fall to just above $112 a barrel, its lowest in two weeks, while U.S. and German government bonds and gold and other precious metals were also back-pedalling.
Lower oil prices are supportive for global growth and 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 ended at its highest since early June as it extended its gains for the week to 2.5 percent, while Tokyo's Nikkei closed 1.5 percent higher.
Upbeat industrial output and retail sales data from China on Tuesday added to evidence that its economic slowdown may have bottomed out.
Enthusiasm for hard-hit emerging markets continued to revive after last week's weaker-than-expected U.S. jobs data which muted expectations about how fast the Federal Reserve would scale back its stimulus policy.
A Reuters poll on Monday showed economists generally expect the Fed to announce a reduction in its $85 billion monthly bond-buying programme by just $10 billion.
The MSCI emerging equities index was at a three-month high as the day's 1.4 percent rise took its rally over the last nine trading sessions to almost 9 percent.
Societe Generale strategist Benoit Anne warned it could prove to be a short-term bounce.
But Bill Street, head of EMEA investments at State Street in London, challenged that view. "When the developed markets are getting back on their feet, I just don't understand at what point that is bad for emerging markets," Street said.
DOLLAR, EURO CLIMB, YEN RETREATS
The cooling Syria tensions and the better China data helped the dollar shake off some of its recent sluggishness and the euro sidestep some weaker-than-expected French output figures.
The broader currency market trend away from safe-havens sent Japan's yen back below 100 to the dollar and to a seven-week low against the euro, while the Swiss franc also lost ground. However, the dollar remained near a 1-1/2 week low against a basket of major currencies.
Adding to 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.
But "geopolitical risks around Syria are a bit smaller and we also had some decent numbers out of China. This is a good combination to go into riskier currencies, so people are moving out of the classic safe havens like the yen and Swiss franc," said Arne Lohmann Rasmussen, head of FX research at Danske Bank.
(Additional reporting by Anooja Debnath in London; Editing by Ruth Pitchford)