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* China Q2 GDP matches consensus, monthly activity data upbeat
* Europe see-saws but MSCI world creeps to highest since Feb 2018
* MSCI ex-Japan reverse losses; Chinese, HK shares bounce off lows
* Aussie dollar climbs, Morgan Stanley says re-enters short USD/JPY trade
* Oil eases back, industrial metals nudge higher
LONDON, July 15 (Reuters) - Surprisingly upbeat economic soundings from China lifted the global markets mood on Monday, pushing world shares towards an 18-month high and steering the Aussie dollar and copper upwards.
Investors were waiting for a torrent of second-quarter corporate earnings this week and a G7 finance chiefs meeting in France, but there was plenty to be getting on with before that.
China's second quarter annual GDP growth rate fell to a 27-year low of 6.2% as expected, but its quarterly growth reading of 1.6% was ahead of forecasts and June reports on industrial production, retail sales and urban investment were also well above expectations.
Shanghai and Hong Kong stock markets had ended marginally positive, only held back by the concern that such a brisk pickup in activity may see economic policymakers ease back on the monetary and fiscal stimulus measures that were deemed largely responsible for the acceleration.
A report by Reuters that Washington may approve licenses for companies to restart new sales to Huawei in as little as two weeks also improved the mood in Chinas tech sector, while a steady start in Europe left MSCI's world index eyeing Feb. 2018 highs.
"It is no surprise that China is slowing down and if you look at the other components of the data like retail sales and industrial production, they are looking a little bit better than expected," said CMC Markets analyst David Madden.
"Traders seem to be content to maintain a bit of optimism."
With the S&P 500 closing in record territory again on Wall Street on Friday and above 3,000 for the first time, markets are confident the U.S. Federal Reserve will cut its key interest rate by at least a quarter point late this month.
In currency markets, the Australian dollar, often played as a liquid proxy for the Chinese yuan, sprang to its highest since July 4 against the dollar as it ticked higher against the yen and the Swiss franc.
At 12.39%, the Vix volatility gauge had its lowest close since April. Ten-year Treasury yields continued to nudge higher, with the yield curve between 3 months and 10 years whose inversion for much of the past two months was widely seen as a harbinger of recession over the next couple of years back probing positive territory for the first since mid-May.
Most euro zone government bond yields edged down from recent 3 1/2-week highs in early moves, although the reassuring signs from the global economy meant the moves were small in scale.
Germany's benchmark 10-year bond yield was down just a basis point at minus 0.25%, edging off Friday's 3 1/2-week high but still about 16 basis points above record lows reached earlier this month.
"The whole movement in bonds lost steam last week," said Norbert Wuthe, a rates strategist at Bayerische Landesbank.
Commodities markets struggled to make up their minds about how to interpret the Chinese data.
Brent crude was off 10 cents at $66.62. U.S. crude fell 21 cents to $60 a barrel, although that also came after both contracts had posted their biggest weekly gains in three weeks on diplomatic tensions in the Middle East and cuts in U.S. oil production.
Gold slipped to 1,414.25 an ounce, drifting away from a recent six-year top of $1,438.60, but most industrial metals climbed on the data and nickel prices were boosted by additional supply worries from major producer Indonesia.
"This (China data) is a big relief. It seems that the government's support has eventually had some positive impact on the economy, especially in the seasonally weak month of June," said analyst Helen Lau of Argonaut Securities.
Later in the week, U.S. retail sales and industrial production data will provide clues about the health of the world's largest economy. The U.S. Federal Reserve will release its 'Beige Book' on Wednesday, which investors will scour for comments on how trade tensions were affecting the business outlook.
(Additional reporting Dhara Ranasinghe in London and Mai Nguyen in Singapore; Editing by Andrew Heavens)