By Marc Jones
LONDON (Reuters) - A week of gains for world stocks petered out on Wednesday and a sell-off in oil and core government debt eased, as talks began on trying to avert a U.S. military strike on Syria against a broadly calm market backdrop.
The safe-haven yen was at a seven-week low against the dollar and stood near multi-year lows against the euro and sterling, while shares in Europe inched lower in early deals after indexes across most of Asia had finished the day flat.
U.S. President Barack Obama said late on Tuesday that Russia's offer to push Syrian President Bashar al-Assad to put chemical weapons under international control could potentially head off the type of limited military action he was considering.
"Over the last few days, we've seen some encouraging signs," Obama said in televised speech from the White House.
Markets were largely in consolidation mode after the big moves of the two previous sessions when what looked to be a rapid move towards U.S. action was halted by Russia's plan.
Oil recovered a bit of ground with Brent crude lifting to $111.72 a barrel from a 2-1/2-week trough of $110.59. The steadier performance came after a 4-percent drop in the past two sessions, its largest two-day fall since June.
Copper edged slightly higher to $7,185.50 a tonne, while gold inched back up to $1,364.50 having slid to a three-week low of $1,356.85 an ounce.
"The calmer market mood is largely because the geopolitical risks have diminished," said Vasileios Gkionakis, global head of FX Strategy for UniCredit in London.
"At the same time, the market is still digesting all the data that we have had over the last 10-days or so and with the exception of the downward revision of the U.S. payrolls, in general, that has painted a positive picture."
There was little in the way of major economic news out of Asia on Wednesday.
In Europe, Britain's jobs data will be in focus at 0830 GMT amid signs its economy is picking Up.
The FTSEurofirst 300 pan-European share index, was virtually unchanged after an early flurry of deals, as a 0.1 percent rise on Germany's Dax balanced falls of 0.1 and 0.3 percent on London's FTSE and Paris's CAC 40.
The region's core debt markets also saw a subdued start as this week's save-haven sell-off abated.
Benchmark German government bonds tracked minor gains by U.S. Treasuries, though UK gilts inched back ahead of the jobs data and focus remained on Italy after its benchmark yields rose above Spain's for the first time in 18 months on Tuesday.
Political instability and worries about Italy's banks ahead of a major health check of all euro zone banks by the European Central Bank in the coming months are driving the move.
Rome will sell up to 11.5 billion euros of treasury bills later, ahead of a tripartite bond auction tomorrow which aims to raise 7.5 billion.
Italy was well ahead of the game in terms of meeting its 2013 funding needs, but on Tuesday the Treasury asked parliament to raise the ceiling on this year's net debt issuance to 98 billion euros from 80 billion, given the struggle to rein in public finances.
Stock futures pointed to a quiet start on Wall Street later after the S&P 500 chalked up its sixth day of gains on Tuesday.
Also helping risk currencies against the yen, which had seen some safe-haven buying in recent weeks, was stronger-than-expected industrial output that reinforced signs that China's economy was stabilizing.
The dollar scaled a seven-week peak of 100.55 yen, while the euro touched a 16-week high around 133.37. Against the dollar, the common currency reached a two-week high of $1.3282 before slipping back to $1.3260 by 0745 GMT.
MSCI's broadest index of Asia-Pacific shares outside Japan ended 0.1 percent lower but remained at a three-month high having gained more than 8 percent in the last two weeks. Emerging market stocks dipped 0.3 percent.
E-Trade Securities analyst Choi Kwang-hyeok said some investors were choosing to book profits ahead of next week's Federal Reserve meeting that could see the U.S. central bank begin to scale back its massive stimulus campaign.
"The week ahead contains cues that could change foreign capital flows," he said.
(Editing by John Stonestreet)