* Share bounce hemmed in by Treasury yields at new 4-yr high
* Dollar slips ahead of U.S. inflation test
* Oil, commodities rise after week of steep losses (Updates prices, adds graphic)
By Sujata Rao
LONDON, Feb 12 (Reuters) - World shares climbed half a percent on Monday, attempting to brush off fresh rises in global bond yields while equity futures also pointed to a firmer session on Wall Street which suffered its worst week in two years.
A higher Friday close for New York stocks following a week of “vol” induced selling, lifted markets in Asia and Europe, helping MSCI’s all-country index rise off four-month lows , while European shares firmed 1.4 percent after touching six-month troughs last week.
Wall Street’s equity volatility gauge, the VIX - the spike in which had kicked off the ructions - was at 26.5 percent, easing off Friday’s 29 percent close.
While the index had rocketed to 50 at the height of last week’s turmoil, current levels are well above the long-term average around 11 percent, in a sign that investors’ nerves are still jangling.
The continued move-up in bond yields is reinforcing the fear of more volatility ahead. Ten-year Treasury yields hit new four-year highs around 2.90 percent, while German yields, the benchmark for Europe, hovered just below 0.8 percent, the 2-1/2-year high touched last week .
“People are nervous after the shock of the past week but it doesn’t feel like there is a crisis around the corner. But never say never,” said Grant Lewis, head of research at Daiwa Capital Markets in London.
Given solid world economic growth, Lewis said the falls were more likely a wobble than a full-blown correction to the nine-year long equity bull market as bond investors priced in an improved economic outlook.
“Even at 2.90 percent, 10-year Treasury yields are still low,” he added.
U.S. equity futures rose 1 percent .
Data from the U.S. Commodity Futures Trading Commission showed equity funds had cut long positions in S&P 500 futures, reducing exposure to a market which has fallen about 8 percent from Jan. 26 record highs.
While equity markets attempt to recover, the question is whether they can withstand another sharp move up in bond yields - something will be put to the test by economic data this week.
In China, banks extended a record amount of new yuan loans in January, blowing past expectations, which is likely to support growth not only in China but underpin liquidity globally.
Analysts forecast U.S. consumer price inflation, to be released on Wednesday, to have slowed to 1.9 percent in January from a year earlier, while the core measure is seen ticking down to 1.7 percent.
Given it was fears of faster inflation - and more aggressive rate rises - that triggered the global rout in the first place, an above-forecast figure could well spark a fresh selloff in stocks and bonds.
Central bankers have not exhibited much concern over the equity rout, indicating they intend to push on with plans to tighten monetary policy this year.
On currency markets, traders had cut net short positions in the dollar last week, CFTC data showed, but speculators returned on Monday to short the dollar, pushing it 0.2 percent lower versus a basket of currencies.
Societe Generale said the risk bounce was being countered by the steeper U.S. bond curve but the soft dollar showed the former currently had the upper hand.
The gap between short- and long-dated U.S. yields is at the widest in more than three months - the so-called curve steepening which indicates higher inflation expectations and economic activity.
“If a better risk mood just encourages 10-year Treasuries to spike up through 2.9 percent, it seems unlikely that we will see equities bounce too far and by the same token, it’s too early to sell dollars,” Societe Generale warned clients.
The euro rose around 0.2 percent, after losing 1.8 percent last week, while the yen eased off five-month highs hit last week amid the flight to safe-havens.
Sterling meanwhile inched higher, off last week’s three-week lows but Britain’s shaky economy and rocky Brexit process kept it fragile.
Monday’s more cheerful market mood also lifted commodities, with Brent crude futures rising two percent after last week’s 9 percent fall, copper bouncing off two-month lows and gold up 0.2 percent, well off five-week troughs.
Reporting by Sujata Rao; additional reporting by Dhara Ranasinghe and Ritvik Carvalho in London; Wayne Cole in Sydney; Editing by Alison Williams