People wait to cross a street as cars pass by in Tokyo
People, standing in front of an electronic board displaying share prices, wait to cross a street as cars pass by in Tokyo, August 22, 2011. REUTERS

World stocks, the euro and commodity prices advanced on Tuesday after gauges of Chinese and German manufacturing activity were not as weak as some had feared.

Investors took heart from the flash purchasing managers' indexes from Germany and China, which, although showing the factory sector was likely to slow, indicated the motors of the global economy in recent years were still growing robustly.

Any data that just hints that the world is not ending is going to be well received by the markets, Ian Richards, European equity strategist at RBS, told Reuters.

Financial markets have stabilized in the past two sessions after two weeks of turmoil which reignited fears of a new crash to match that of 2008.

World stocks measured by MSCI All-Country World Index advanced 1 percent, though the benchmark is still down more than 12 percent this month.

Europe's FTSEurofirst 300 index rose 1.8 percent, extending the previous session's 0.8 percent rise, while Tokyo's Nikkei average ended 1.2 percent higher.

Some investors were also hoping the U.S. Federal Reserve would flag further stimulus when central bankers gather in Jackson Hole, Wyo., late this week, a year after Chairman Ben Bernanke launched a second round of government bond buying program, known as quantitative easing, to revive the economy.

There is also the fact that much of the gains being seen here seem to be coming off the expectation that the Fed will serve up further stimulus measures, possibly as soon as the end of this week, said Cameron Peacock, market analyst at IG Markets.

Clearly with this being priced in, failure to deliver here will see traders heading for the exits once again.

For now investors seemed to be happy chasing riskier assets after recent sell-off on worries over global economic growth and the euro zone sovereign debt crisis.

The euro was up 0.5 percent at $1.4436 on Tuesday, while the Australian dollar edged 0.9 percent higher to $1.0491.

The dollar was down 0.2 percent at 76.66 yen, still holding above record low of 75.94 yen struck late last week as market players were wary of any yen-selling intervention by Japanese authorities.

Copper gained 1.4 percent to trade above $8,800 a tonne, and crude prices rose 0.5 percent to below $109 a barrel as fighting in Libya continued and in anticipation of a fall in U.S. crude stockpiles.

Nevertheless, gold struck another record high above $1,910 an ounce before slipping 0.7 percent to below $1,900.

(Additional reporting by Atul Prakash and Anirban Nag in London; Editing by Anna Willard)