* Delay in Syrian action by U.S. helps lift world shares
* Factory activity growth in China, Europe buoys shares
* Dollar touches one-month high against yen at 99.30 yen
* Oil, copper prices rise, gold dips
By Marc Jones
LONDON, Sept 2 A delay in potential U.S.
military action in Syria and improving economic data from China
and Europe lifted world share markets on Monday and sent
safe-haven government bonds, gold and the Japanese yen lower.
Oil prices rebounded on the brighter economic outlook, after
falling initially following U.S. President Barack Obama's
decision to rule out military action against Syria until
lawmakers have had a chance to vote on the plan.
"Oil would have been pushed lower had it not been for the
China data," said Ben Le Brun, market analyst at OptionsXpress.
"The market is keeping an eye on the Middle East and
developments in Syria, but we have seen some tensions easing."
Conflict in Syria is a worry for markets because it
threatens to ignite wider tensions in a region that produces a
third of the world's oil.
By mid afternoon in Europe, Brent crude was slightly firmer
at $114 per barrel after shedding more than a $1 in
Gold was down 0.2 percent at $1,389.40 an ounce while
10-year German government bonds, another traditional refuge for
nervous investors, fell sharply, pushing the yield up 6 basis
points and back towards a 1-1/2-year high hit last
"The risk premium linked to geopolitical events has
decreased, so risk appetite probably is resuming somewhat," said
Patrick Jacq, European rate strategist at BNP Paribas.
GLOBAL ECONOMY SHINES
Wall Street was closed for the Labor Day holiday and that
would probably keep global market activity in check.
Many investors were also wary of taking action ahead of
major central bank meetings later in the week and the important
U.S. payrolls report on Friday. The jobs data could influence
markets' view on when the Federal Reserve is likely to start
scaling back stimulus, which has helped drive equity markets
Prospects for the global economy have brightened
considerably according to a fresh round of purchasing managers'
surveys for August, which provide a guide to future levels of
PMIs for China indicated activity in the country's vast
manufacturing sector was at its highest in more than a year,
easing investor concerns that the world's No. 2 economy was on
course for a sharp slowdown this year.
The recent signs of improvement also continued in the euro
zone where factory activity rose at its fastest pace in over two
years, and manufacturing in struggling Spain grew for the first
time since April 2011.
Europe's broad FTSEurofirst 300 share index ended up
1.8 percent, on course for its biggest one-day jump since the
start of July as the data, which was particularly strong in the
UK, also lifted sterling.
In the United States, stock futures rose on the delay in
action on Syria. S&P 500 futures rose 16.5 points. Dow
Jones industrial average futures added 117 points and
Nasdaq 100 futures rose 35.5 points.
Elsewhere, India notably bucked the improving trend. Factory
activity in Asia's third-largest economy shrank in August for
the first time in over four years, putting further pressure on
the battered rupee and adding to the country's economic malaise.
The data halted a two-day rebound in the rupee, which edged
down 0.4 percent to 66 to the U.S. dollar and was not far
from a record low of 68.80 hit last week.
"Just about the whole world seems to be surprising on the
upside on PMIs except India," said Mike Ingram, market
commentator at BGC Partners.
MSCI's world equity index was up 0.6 percent
after four consecutive weekly losses during which investors
positioned for the Fed to begin trimming its monetary stimulus,
perhaps at its meeting this month.
The reduced risk of an imminent U.S. attack in Syria dented
demand for the Japanese yen, which is often sought for its
safety in a time of crisis. That helped spur the dollar to 99.27
yen, up 1.1 percent and its highest in a month.
The dollar index, which tracks the greenback against six
major currencies, was up only 0.2 percent at 82.255 as
sterling's rise to $1.5579, driven by the strongest UK
manufacturing PMI in 2-1/2 years, balanced out the weaker yen
"The UK's factories are booming again ... as rising demand
from domestic customers is being accompanied by a return to
growth of (its) largest trading partner, the euro zone," said
Rob Dobson, senior economist of the index's compiler Markit.
China's brighter economic news helped emerging market assets
and lifted the Australian dollar, which is seen as a
proxy for Chinese growth because of the two countries' close
trade ties. It rose 0.9 percent to $0.8990.
Copper prices, also buoyed by the factory data from
top consumer China, rebounded 2.0 percent to $7,235 a tonne
after a four-day losing streak.