* 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 a six-month high on Tuesday, as the biggest jump in Chinese stocks for over two years and an upbeat start for Europe followed Wall Street's best close since January.
The moves came despite a host of simmering global feuds. Oil prices ticked higher as the United States reimposed some sanctions on Iran, while the Turkish lira bounced back almost 2 percent from its worst day in a decade on Monday that had been prompted by a row with Washington.
The mood lifted overnight as Chinese stocks rebounded 2.7 percent on hopes of fresh government spending, following a four-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 investors cheered results from Italy's biggest bank UniCredit and oil firms and miners gained on the rise in crude prices.
"The Chinese have stabilised the yuan, the lira hasn't been annihilated this morning so once the sharp FX moves have calmed down and as long as the (company) earnings are good, you have a more risk friendly environment," said Societe Generale strategist Kit Juckes.
Currency markets remained volatile although less so than in recent sessions as the dollar dipped.
The euro bounced to $1.1583 from a near six-week low despite a second day of disappointing German economic data, while Britain's pound made back some ground after Brexit worries had pushed it to an 11-month low.
Turkey’s lira recovered 1.7 percent from Monday's losses of more than 5 percent after Washington had moved to end duty-free access to U.S. markets for some Turkish exports. A report by CNN Turk that Turkish officials would go to Washington to discuss the strained relations helped the rise, although the lira remains close to a record low.
Already struggling with inflation at 14-year highs near 16 percent and political pressure on the central bank not to raise interest rates, the lira’s year-to-date losses are nearing 30 percent as jitters about foreign currency debt payments rise.
"Currently the impact of the lira's slide is mostly contained within the country. But fears of a default will begin to increase if the currency keeps depreciating," said Kota Hirayama, senior emerging markets economist at SMBC Nikko Securities. "Such a development could affect some European financial institutions," he added.
An impressive global earnings picture and upgrades to the U.S. profit growth horizon outweighed the global trade tensions and 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 hit earlier that month.
The Vix volatility gauge closed at its lowest since Jan. 26. A surge in U.S. corporate earnings driven by tax cuts - they achieved an annual aggregate growth rate of about 25 percent in the second quarter - has prompted the likes of Citi to upgrade their end-2018 and 2019 earnings forecasts.
Wall Street buoyed market sentiment around the world, with Tokyo and Seoul both up 0.6 percent and Hong Kong closing up more than 1 percent along with Shanghai's big bounce.
In commodities, oil extended the previous day's rally after the imposition of U.S. sanctions against major crude exporter Iran took effect on Tuesday.
Benchmark Brent crude oil futures shook off earlier weakness and were 0.33 percent higher at $73.99 a barrel. They had gained 0.75 percent on Monday after OPEC sources said Saudi production had unexpectedly fallen in July.
On bond markets, borrowing costs for euro zone benchmark issuer Germany were pinned near their lowest levels in almost two weeks as concerns about global trade and turbulence in Italy continued to support demand for the least risky assets.
The softer dollar helped metals. Copper was up 0.5 percent at $6,161.50 a tonne after retreating more than 1 percent 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 David Stamp)