* Equities bounce as China manufacturing survey tops forecasts
* Dollar index enjoys record-breaking winning streak
* Commodities pare losses, oil still near lowest since mid-2012
* Geopolitics a drag as US attacks IS targets in Syria
By Wayne Cole
SYDNEY, Sept 23 (Reuters) - Asian shares recouped early losses on Tuesday while commodities won a break from recent selling pressure after a reading on China's massive factory sector outpaced the market's bleak expectations.
The HSBC flash reading on manufacturing (PMI) for September rose to 50.5, from 50.2 in August and confounding forecasts for a dip to 50.0.
The market had been braced for something even worse and the relief helped Chinese stocks move into the black and the Australian dollar blip higher. The Asian giant is Australia's single biggest export market and investors often use the currency as a liquid proxy for China plays.
Annette Beacher, head of Asia-Pacific research at TD Securities, noted the flash PMIs had averaged 50.9 for the third quarter, a pickup over the previous quarter's 49.6.
" After the dismal industrial production print for August, financial markets were increasingly of the view that China is slowing at a more rapid pace than desired, so today's print provides a welcome offset," said Beacher.
The Shanghai Composite Index added 0.6 percent and the CSI300 of the leading Shanghai and Shenzhen A-share listings bounced 0.7 percent.
Australia's main index rallied to be up 0.5 percent, though the best that MSCI's broadest index of Asia-Pacific shares outside Japan could manage was to turn flat. Japanese markets were shut for a holiday.
Hindering sentiment was news the United States and partner nations were carrying out the first air strikes against Islamic State targets in Syria, a far more complicated front in the battle against militants.
Shares had begun badly after Wall Street took a dip overnight. The Dow had ended Monday down 0.62 percent, while the S&P 500 lost 0.8 percent and the Nasdaq 1.14 percent.
The drop in the S&P was the biggest one-day decline since early August and was caused in part by a soft reading on U.S. existing home sales which hit shares in building companies.
US DOLLAR IN DEMAND
The soggy data gave a fillip to Treasuries, as did comments from New York Federal Reserve bank president William Dudley that there was still excessive slack in the economy so any increase in rates should be done cautiously.
Dudley played down the importance of the various interest rate projections of Fed members released last week which some in the market had taken as a signal of a hawkish turn.