* World shares near 6-month high as China shares shine
* Turkish lira bounces 1.7 pct after Monday drubbing
* Euro, pound tick higher as dollar eases
* Oil prices drift higher on Iran sanctions
By Marc Jones
LONDON, Aug 7 (Reuters) - World shares edged toward asix-month high on Tuesday, as the biggest jump in Chinese stocksfor over two years and an upbeat start for Europe followed WallStreet's best close since January..
The moves came despite a host of simmering global feuds. Oilprices ticked higher as the United States reimposed somesanctions on Iran, while the Turkish lira bounced backalmost 2 percent from its worst day in a decade on Monday thathad been prompted by a row with Washington.
The mood lifted overnight as Chinese stocks rebounded 2.7percent on hopes of fresh government spending, following afour-day selloff that had knocked them down about 6 percent. London , Paris and Frankfurt followed by rising 0.6 to 0.9 percent as Europe's investorscheered results from Italy's biggest bank UniCredit andoil firms and miners gained on the rise in crude prices.
"The Chinese have stabilised the yuan, the lira hasn't beenannihilated this morning so once the sharp FX moves have calmeddown and as long as the (company) earnings are good, you have amore risk friendly environment," said Societe Generalestrategist Kit Juckes.
Currency markets remained volatile although less so than inrecent sessions as the dollar dipped.
The euro bounced to $1.1583 from a near six-week lowdespite a second day of disappointing German economic data,while Britain's pound made back some ground after Brexitworries had pushed it to an 11-month low. Turkey's lira recovered 1.7 percent from Monday's losses ofmore than 5 percent after Washington had moved to end duty-freeaccess to U.S. markets for some Turkish exports. A report by CNNTurk that Turkish officials would go to Washington to discussthe strained relations helped the rise, although the liraremains close to a record low.
Already struggling with inflation at 14-year highs near 16percent and political pressure on the central bank not to raiseinterest rates, the lira's year-to-date losses are nearing 30percent as jitters about foreign currency debt payments rise.
"Currently the impact of the lira's slide is mostlycontained within the country. But fears of a default will beginto increase if the currency keeps depreciating," said KotaHirayama, senior emerging markets economist at SMBC NikkoSecurities. "Such a development could affect some Europeanfinancial institutions," he added..
WALL STREET WHOOSH
An impressive global earnings picture and upgrades to theU.S. profit growth horizon outweighed the global trade tensionsand the various emerging market dislocations.
Wall Street's S&P 500 closed at its highest level since Jan.29 overnight, less than 1 percent from its record high hitearlier that month.
The Vix volatility gauge closed at its lowest since Jan. 26.A surge in U.S. corporate earnings driven by tax cuts - theyachieved an annual aggregate growth rate of about 25 percent inthe second quarter - has prompted the likes of Citi to upgradetheir end-2018 and 2019 earnings forecasts.
Wall Street buoyed market sentiment around the world, withTokyo and Seoul both up 0.6 percent and Hong Kong closing upmore than 1 percent along with Shanghai's big bounce.
In commodities, oil extended the previous day's rally afterthe imposition of U.S. sanctions against major crude exporterIran took effect on Tuesday. Benchmark Brent crude oil futures shook off earlierweakness and were 0.33 percent higher at $73.99 a barrel. Theyhad gained 0.75 percent on Monday after OPEC sources said Saudiproduction had unexpectedly fallen in July.
On bond markets, borrowing costs for euro zone benchmarkissuer Germany were pinned near their lowest levels in almosttwo weeks as concerns about global trade and turbulence in Italycontinued to support demand for the least risky assets. The softer dollar helped metals. Copper was up 0.5percent at $6,161.50 a tonne after retreating more than 1percent the previous day. Gold, which is stuck near a one-year low, crawled 0.2 percent higher to $1,208.06 an ounce.
(Additional reporting by Helen Reid in London; editing by DavidStamp)
Messaging: marc.jones.thomsonreuters.com@reuters.netTwitter@marcjonesrtrs))