GLOBAL MARKETS-Shares gain on signs of delay in Syria action; oil retreats
* Anxiety over imminent Syrian attack eases, caution rules
* World equities end selloff, Wall Street opens higher
* Dollar gains after U.S. GDP, jobless reinforce Fed tapering view
* Oil retreats from 6-month peak, gold off 3-1/2 month high
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, but investors were on edge over potential turmoil in the Middle East.
Wall Street rose for a second day, boosted by a possible large deal between Vodafone and Verizon. Data also 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 rose broadly, up 0.7 percent against a basket of currencies at 82.035. Against the safe-haven yen, it was up 0.7 percent at 98.31 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.
"There's a lot of uncertainty as Western powers have taken a step back, so the market is encouraged of some stepping back from the brink," said Peter Jankovskis, co-chief investment officer at OakBrook Investments in Lisle, Illinois.
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.
In the oil markets, the reduced likelihood of an immediate major supply disruption caused Brent crude to drop below $116 a barrel, ending its strongest two-day gain since January 2012.
Brent crude for October delivery LCOc1 hit a low of $114.94 a barrel before recovering to $115.90, while October U.S. crude fell $1.50 to a low of $108.60 a barrel before rallying to around $109.40, following a near 4 percent gain over the past two days.
"The market is reassessing the supply implications of the conflict in Syria," said Eugen Weinberg, global head of commodities at Germany's Commerzbank.
"Our view is military action will not destabilize the whole Middle East, which means the risk premium is being overstated. If the conflict is contained in Syria, prices are too high."
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.
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 percent.
On Wall Street, the Dow Jones industrial average was up 76.94 points, or 0.52 percent, at 14,901.45. The Standard & Poor's 500 Index was up 9.79 points, or 0.60 percent, at 1,644.75. The Nasdaq Composite Index was up 36.55 points, or 1.02 percent, at 3,629.90.
In Treasuries, the benchmark 10-year U.S. Treasury note was down 7/32, the yield at 2.7892 percent.
European stocks also rose, snapping a sharp two-day drop, as Vodafone's renewed talks on selling Verizon its stake in their cellular joint venture sent the UK firm's stock to a 12-year high and sparked a brisk rally in the telecom sector.
The FTSE Eurofirst 300 index of top European firms was up 0.8 percent, while Italy's main benchmark index, the FTMIB , outperformed with a rise of 1.0 percent.
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.