By Jemima Kelly
LONDON (Reuters) - Global shares gained convincingly on Tuesday, clawing back all the ground lost the previous day as investors bet that Friday's attacks on Paris would have little lasting impact on the economy.
With less nervy markets refocusing on the diverging outlooks between the United States, where an interest rate rise is expected next month, and a euro zone set for still looser monetary policy, the euro fell to a seven-month trough against a broadly stronger dollar.
Oil prices dipped after early gains, as the spotlight returned to a global oversupply in crude and petroleum products, with gains made after the Paris attacks and subsequent French air strikes in Syria fading.
Having hit a six-week high on Monday, the widely tracked CBOE volatility index, or "fear gauge", fell almost 10 percent.
European shares were also helped by encouraging updates from companies such as the world's second-biggest recruitment company Randstad and Germany's United Internet. (EU)
The FTSEurofirst 300 index was up 1.8 percent at 1,486.45 points by 0901 GMT after closing 0.2 percent higher in the previous session. French shares were up 1.7 percent, after falling 0.1 percent on Monday following the attacks that killed more than 120 people.
"European equity markets are catching the tailwind from the U.S. after a strong close yesterday," said B Capital Wealth Management Managing Director Lorne Baring.
"Investors are showing resilience to the recent attacks in Paris despite mounting worries over security in Europe."
Investors are also eying the latest German ZEW economic sentiment report due at 1000 GMT.
COPPER PLUNGES
Copper prices plunged to a fresh six-year low below $4,600 per tonne on Tuesday as technical dealings in Shanghai and worries about demand from China, the world's top consumer, triggered another round of selling in London. (MET)
The dollar's appreciation has also buffeted industrial metals as a stronger U.S. currency makes greenback-denominated commodities more expensive for buyers.
The euro dipped to $1.0656, its weakest since mid-April. Gains against the single currency helped the dollar also reach its highest in seven months against a basket of major currencies.
"Even though investors sold the euro (in the wake of the Paris attacks), the decline could have been a lot steeper," wrote Kathy Lien, managing director of FX Strategy for BK Asset Management.
MSCI's broadest index of Asia-Pacific shares outside Japan earlier rose 1.7 percent, taking its cue from a surge on Wall Street and bouncing from a six-week low struck the previous day on risk aversion.
Shanghai stocks climbed 1.4 percent, while Japan's Nikkei added 1.6 percent, brushing a three-month peak.
The yen, which usually moves in the opposite direction to Japanese shares and which tends to be sought in times of geopolitical tension, edged towards a three-month low against the dollar. That followed data on Monday that showed Japan, the world's third-biggest economy, relapsing into recession.
Greek bond yields hit their lowest in more than a year and banking stocks rose about 10 percent on Tuesday after the country's finance minister said Athens had reached an agreement with its lenders on financial reforms. [GVD/EUR]
Internationally traded Brent crude futures LCOc1 rose towards $44.80 before dropping back to $44.59 a barrel.