Global stock markets clawed back losses Monday as spiralling tensions over North Korea showed tentative signs of easing, in turn reducing appetite for haven assets.

Fears of a catastrophic confrontation between Washington and Pyongyang were calmed when CIA director Mike Pompeo said Sunday there was "nothing imminent" in the escalating stand-off.

Equities were boosted also by a positive lead from Wall Street on Friday, after investors waded back into the market following a three-day sell-off.

Around 1030 GMT, London's benchmark FTSE 100 index climbed 0.5 percent compared with the close on Friday, while the eurozone's Frankfurt and Paris indices were up about 1.0 percent in early midday deals.

"European equity markets appear to have left the fears of late last week behind, with investors coming out of their defensive positions to move back into riskier assets," said Joshua Mahony, market analyst at traders IG.

In Asia, Hong Kong was back in positive territory Monday after slumping two percent Friday, while Shanghai ended the day higher despite data showing Chinese industrial production slowed sharply in July as government efforts to rein in debt weighed on demand.

However, Tokyo closed one percent down as traders returned from a three-day holiday weekend to play catch-up after Asian and European shares had dropped Friday, with the Nikkei finishing at its lowest level in more than three months.

Investors largely shrugged off official data showing Japan's economy grew by a faster-than-expected one percent in the three months to June, as the accelerating world number three economy marked its longest economic expansion in more than a decade.

"What we are seeing today is relief at the (geopolitical) situation not deteriorating over the weekend, something traders were clearly wary of towards the end of last week," said Oanda analyst Craig Erlam.

As markets started recovering, the dollar rose against the Japanese currency to above 109.7 yen in afternoon trade -- although still off 109.99 yen in Tokyo on Thursday -- while gold halted its advance after jumping 2.4 percent last week.

"We're seeing a small unwinding of ... risk aversion trades, with gold trading slightly lower and the yen and Swiss franc off against the dollar, pound and euro," Erlam added. 

Indices could reap the benefit of investors returning following losses worldwide last week, triggered after President Donald Trump threatened to unleash "fire and fury" on North Korea, and Pyongyang countered by announcing plans to test-launch missiles toward Guam.

 - 'Not out of the woods yet' - 

"There is a still a 'buy the dips' mentality running through financial markets, assisted by global growth in a good spot (while) global corporate earnings have been strong," said Chris Weston, chief market strategist at IG Markets.

Seoul, which endured a torrid time last week with stocks losing 3.2 percent, finally broke its four-day losing streak, while Sydney also saw gains.

However, analysts cautioned that with joint South Korean–US military exercises scheduled and North Korea celebrating "Liberation Day" Tuesday, volatility could return to markets.

"We are not out of the woods yet and the situation in North Korea will remain front and centre," said Weston.

Wall Street had called a halt to the global slump on Friday, with analysts saying the Dow was boosted by weaker than expected consumer price inflation (CPI) figures, seen as reducing pressure on the Fed for an early rate rise.

Crude prices edged lower later Monday after holding steady for much of the day as the market continued to weigh rising global supply against output curbs from OPEC members and other leading producers.

"Oil seems to have found an equilibrium point and as long as we continue to see US inventories decline, it may be content to hold around here," said Ric Spooner, an analyst at CMC Markets in Sydney.

 - Key figures around 1030 GMT - 

London - FTSE 100: UP 0.5 percent at 7,348.60  points

Frankfurt - DAX 30: UP 1.0 percent at 12,136

Paris - CAC 40: UP 0.9 percent at 5,104.20

EURO STOXX 50: UP 1.0 percent at 3,420.90

Tokyo - Nikkei 225: DOWN 1.0 percent at 19,537.10 (close)

Hong Kong - Hang Seng: UP 1.4 percent at 27,250.23 (close)

Shanghai - Composite: UP 0.9 percent at 3,237.36 (close)

New York - Dow: UP 0.1 percent at 21,858.32 (close)

Euro/dollar: DOWN at $1.1797 from $1.1824

Pound/dollar: DOWN at $1.2978 from $1.3015

Dollar/yen: UP at 109.67 yen from 109.11 yen

Oil - Brent North Sea: DOWN 28 cents at $51.82 per barrel 

Oil - West Texas Intermediate: DOWN 22 cents at $48.60