LONDON (Reuters) - World shares were propelled towards five-year highs on Tuesday by signs China was moving to avoid a hard landing for its slowing economy, but copper and oil prices slipped as worries over global demand lingered.
Stock index futures pointed to Wall Street extending its gains and testing fresh record highs when trading gets underway, though results from tech giant Apple (AAPL.O) due later in the day could keep a lid on any gains. .N
Share markets worldwide gained after local media in China reported the government was looking to increase investment in railway projects as part of efforts aimed at ensuring annual economic growth does not sink below 7 percent.
Asian shares outside Japan rose by 1.3 percent to their highest since early June on the reports and Britain's mining-heavy FTSE index touched a seven-week high, though a lack of detail made some in the markets cautious.
"Managing to keep (Chinese growth) above 7 percent will certainly be viewed as a positive stance," said IG Markets analyst Alastair McCaig. "But they really have only five months to prove their words are worth their weight."
Deal-making in the telecoms sector fed the gains across Europe during the morning, lifting the broad FTSE Eurofirst 300 index 0.3 percent to near a seven-week high.
The euro zone's blue-chip Euro STOXX 50 index was up 0.6 percent to bring its gains since late June to 10 percent, mirroring sharp rises on Wall Street where the S&P 500 hit a record closing high on Monday.
The recent rally has sharpened scrutiny on company statements in the corporate earnings season now underway.
"Earnings have been relatively good so far, although the bulk of results still have to come," said David Thebault, head of quantitative sales trading at Global Equities.
An upgraded economic outlook from Japan's government helped lift Tokyo's Nikkei 0.8 percent and send the MSCI world equity index up 0.2 percent, within touching distance of May's five-year high.
Heightened expectations that Japan's government will stick to expansionary policies after weekend elections also supported the yen, which hit a one-week peak against the dollar at 99.14 yen before the greenback recovered to close to 100 yen.
Demand for the dollar has been steadily draining away as the Federal Reserve reassures investors there will be no precipitous end to its bond-buying stimulus. "Yesterday we had some weaker U.S. housing data that reinforced that message," said Jane Foley, senior currency strategist at Rabobank.
However, a rise in the 10-year Treasury note yields though the 2.5 percent level during the European morning helped the dollar.
The euro meanwhile has been steady as political tensions across the region ease and was flat on Tuesday at $1.3187, close to a one-month high of $1.3218.
In emerging markets, the Turkish lira strengthened to 1.9081 against the dollar, a one-month high, after the central bank raised its overnight lending rate by 75 basis points to help narrow the gaping current account deficit.
Gold eased back below $1,330 an ounce as the dollar's bounce prompted buyers to pause after the metal's biggest one-day price rise in more than a year. The metal has recovered nearly $160 from a three-year low of $1,180.71 on June 28.
Brent oil inched down to just below $108. Investors were awaiting U.S. crude inventory data for further clues on demand from the world's largest oil consumer.
Additional reporting by Blaise Robinson and Jan Harvey; Editing by Ruth Pitchford