August 29, 2013 / 6:12 PM / 4 years ago

GLOBAL MARKETS-Shares gain as Syria reassessed; dollar up on U.S. GDP

* Anxiety over imminent Syrian attack eases, caution rules

* Global equities up; Wall St gains, Nasdaq up 1 pct

* Dollar gains after U.S. GDP, jobless reinforce Fed tapering view

* Oil retreats from 6-month peak, gold off 3-1/2 month high

By Angela Moon

NEW YORK, Aug 29 (Reuters) - Strong growth in the U.S. economy and signs of a delay in expected Western military strikes on Syria lifted equities worldwide on Thursday and pushed the dollar to two-week peaks.

Brent crude oil eased off a six-month high as traders sold contracts to book profits as fears of a U.S.-led military strike on Syria waned and after the market had its biggest two-day rally in more than 1-1/2 years.

Wall Street rose for a second day, boosted by telecom stocks after a possible large deal between Vodafone and Verizon .

Data showed the American economy grew more quickly than expected in the second quarter, and weekly claims for unemployment benefits fell, bolstering the case for the Federal Reserve to begin winding down its massive economic stimulus program.

In the currency market, the dollar hit a two-week peak, and was on track for its largest daily gain against the euro in more than four months.

The dollar was last 0.7 percent higher against a basket of currencies at 82.018, after earlier hitting 82.067, its highest since Aug. 5. Against the safe-haven Japanese yen, the greenback traded up 0.7 percent at 98.34 <JPY= yen>.

Most major risk asset markets had already been recovering ahead of the U.S economic data on signs that divisions among lawmakers in Britain and the United States would delay any imminent action on Syria in retaliation for alleged gas attacks last week.

The market got "a little out over its skis and the politicians did as well," said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. "Traders are taking some risk off the table and taking a wait and see approach."

President Barack Obama has told Americans a military strike against Syria is in their interests, and administration officials are expected to brief congressional leaders on Thursday about plans to respond.

Brent for October delivery hit a low of $114.94 a barrel, down $1.67, before recovering to trade around $116.00. It jumped over 5 percent in the previous two sessions, posting its strongest two-day gain since January 2012.

October U.S. crude fell $1.50 to a low of $108.60 a barrel before rallying to around $109.30, following a near 4 percent gain over the past two days.

Traditional safe-haven gold eased 0.5 percent to around $1,413 an ounce after reaching a 3-1/2 month high in Wednesday's flight to safety.

In emerging markets, Brazil's decision to raise its benchmark interest rate to a 16-month high of 9 percent on Wednesday helped stabilize the real, while in Indonesia the rupiah strengthened slightly after its central bank hiked its key lending rates.

The Indian rupee rose as high as 66.85 per dollar, up sharply from a record low of 68.85 per dollar hit on Wednesday when its central bank moved to provide dollars directly to oil companies to give the currency some relief.

Emerging market currencies in countries with high current account deficits such as India, Turkey and Brazil have plunged between 12 and 18 percent against the dollar this year on expectations of a withdrawal of the U.S. monetary stimulus that has boosted riskier assets.

Prices for U.S. 10-year Treasuries pared losses to trade flat on Thursday after an auction of seven-year debt. The benchmark 10-year note rose 1/32 in price to yield 2.764 percent.

CALM RETURNS

The better tone in world equity markets emerged after energy shares on Wall Street gained on the rise in oil prices, and this spread to Asia, where MSCI's Asia-Pacific index, excluding Japan , rose 1.2 percent.

On Wall Street, the Dow Jones industrial average was up 44.35 points, or 0.30 percent, at 14,868.86. The Standard & Poor's 500 Index was up 7.06 points, or 0.43 percent, at 1,642.02. The Nasdaq Composite Index was up 32.96 points, or 0.92 percent, at 3,626.31.

In Europe, bumper gains among telecom stocks powered a rebound in equities after Vodafone confirmed it was in talks with Verizon to sell out of its U.S. joint venture.

The FTSEurofirst 300 closed up 0.7 percent at 1,207.05 points, bouncing back after falls of some 2 percent over the last two days.

However, an auction of new Italian debt showed investors remained concerned about the shaky coalition, with government borrowing costs over five years rising.

The MSCI world equity index, which tracks shares in 45 countries, was up 0.4 percent.

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