September 12, 2017 / 7:29 PM / a year ago

GLOBAL MARKETS-Stocks set new highs as Irma, North Korea fears ebb

(Adds oil, gold settlement prices)

* World stocks extend gains to new record

* Dollar steady on improved risk appetite

* Oil edges higher as OPEC output falls

* German Bund yield set for biggest daily jump since July

By Herbert Lash

NEW YORK, Sept 12 (Reuters) - The S&P 500 and a gauge of global equity markets hit new highs on Tuesday as the feared impact of Hurricane Irma waned and the easing of tensions with North Korea helped drive a sell-off in global bond markets.

The U.S. dollar clung to modest gains, helped by the bounce in government debt yields and ahead of U.S. inflation data that could influence the timing of the next Federal Reserve interest rate hike.

Shares of Apple, the most valuable U.S. company, fell 0.78 percent to $160.22 as investors reacted to the unveiling of the 10th anniversary edition of the iPhone. The stock turned negative during product demonstrations.

European shares rose to a five-week high, extending the relief bounce seen in the previous session and Wall Street advanced, led by gains in financial and industrial stocks.

MSCI’s all country world stock index, which tracks more than 2,400 stocks in 47 countries, rose 0.26 percent after it jumped 0.9 percent on Monday, its fourth-biggest gain so far this year.

David Joy, chief market strategist at Ameriprise Financial in Boston, said the environment for risk assets is better.

“As long as these two issues - North Korea and the hurricane - have receded as concerns, it gives investors a green light to focus on stronger fundamentals,” Joy said.

Investors also welcomed U.S. Treasury Secretary Steve Mnuchin’s comments that he was hopeful for tax reform by year’s end with a “competitive” rate for businesses, even if not at the 15 percent bracket backed by President Donald Trump, he said.

The Dow Jones Industrial Average rose 42.48 points, or 0.19 percent, to 22,099.85. The S&P 500 gained 4.5 points, or 0.18 percent, to 2,492.61 and the Nasdaq Composite added 0.77 points, or 0.01 percent, to 6,433.03.

The pan-European FTSEurofirst 300 index rose 0.54 percent to close at 1,499.27. MSCI’s index for emerging market stocks rose 0.23 percent.

European insurance companies rose again, climbing 0.8 percent.

The market mood was “risk-on,” said Pierre Martin, a trader at Saxo Bank, adding the positive trend for banking stocks and automobile shares showed investors were keen on corporate and macroeconomic news rather than geopolitical and Irma worries.

U.S. long-dated Treasury yields hit two-week highs, rising for a third straight session while Germany’s benchmark 10-year bond yield rose sharply and was set for its biggest daily rise since early July.

The benchmark 10-year U.S. Treasury note fell 11/32 in price to yield 2.1655 percent. In Germany, Bunds were last up 7 basis points in price to yield 0.394 percent.

The greenback found support as investors further unwound bearish bets against it. The dollar index, which tracks the currency against a basket of six major rivals, rose 0.05 percent, with the euro up 0.1 percent to $1.1963.

The Japanese yen weakened 0.70 percent versus the greenback at 110.19 per dollar.

Oil prices rose after OPEC forecast higher demand in 2018 and said output fell in August, signs that its production-cutting deal with non-member countries may reduce a supply glut.

The Organization of the Petroleum Exporting Countries also said the two hurricanes that have hit the United States in recent weeks would have a “negligible” impact on demand.

U.S. crude rose 16 cents to settle at $48.32 a barrel and Brent settle up 43 cents at $54.27 a barrel.

U.S. gold futures fell 0.04 percent to $1,335.10 an ounce.

Reporting by Herbert Lash; Editing by Chizu Nomiyama and Nick Zieminski

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