* World stocks rise, boosted by U.S. tax deal
* Euro gains on Ireland budget hopes
* Commodities fall from multiyear highs (Updates with U.S. markets open)
By Manuela Badawy and Dominic Lau
NEW YORK/LONDON, Dec 7 (Reuters) - Global stocks jumped on Tuesday, boosted by a compromise deal to extend expiring U.S. tax cuts, while the euro rose on optimism that Ireland's lawmakers will pass the toughest budget ever.
Copper prices hit a record high, supported by Chinese buying and a firmer euro. Gold also hit a record at $1,430.95 an ounce before easing, while oil prices rose to a 26-month high on demand for heating fuel in parts of Europe and the United States.
U.S. government bonds dropped as the tax deal was seen as a stimulus for the economy, benefiting stocks, commodities and other risky assets.
Despite its rise, the euro was vulnerable, with European policymakers divided over how to tackle the region's debt problem.
U.S. President Barack Obama unveiled a deal late on Monday to renew tax cuts for the middle class as well as for wealthy Americans, as Republicans wanted. For details see [ID:nN06211347]
The announcement was welcomed by the markets as investors bet that the tax breaks would prompt increased spending and buoy the economy as well as lessen chances investors would sell shares.
"U.S. activity is reliant on consumer spending, so any move to help consumer start spending money, particularly in the Christmas period, is going to be seen as positive for the markets," said Joshua Raymond, market strategist at City Index in London.
The Dow Jones industrial average .DJI was up 58.08 points, or 0.51 percent, at 11,420.27. The Nasdaq Composite Index .IXIC was up 12.90 points, or 0.50 percent, at 2,607.82.
The Standard & Poor's 500 Index .SPX was up 5.79 points, or 0.47 percent, at 1,228.91, after touching a new 2010 intraday high at 1,234.83. Global stocks measured by MSCI All-Country World Index .MIWD00000PUS rose 0.87 percent.
Europe's FTSEurofirst 300 .FTEU3 index of top shares rose to a 26-month high with commodity stocks gaining on strong crude oil and metals prices.
Meanwhile, the euro EUR= was up 0.44 percent at $1.3363 as investors expected that Ireland will pass an austerity budget later on Tuesday.
The dollar was up at 83.140 yen JPY= after slipping to a three-week low against the Japanese currency earlier in the session. The renewed strength in the yen dragged Japan's Nikkei 225 .N225 down 0.3 percent.
Clouding the euro's outlook, euro zone policymakers failed to agree on new policies to tackle the region's debt crisis.
The dollar was down against a basket of major currencies, with the U.S. Dollar Index .DXY off 0.18 percent at 79.429 as the news to extend the Bush tax cuts in the United States was seen by investors as dollar-negative.
While the plan could accelerate U.S. growth, it is funded through debt and expected to add significantly to the budget deficit, thus would be another weight on the dollar.
"The likelihood that the Irish budget will pass and the extension of U.S. tax cuts are working together to boost risk appetite, which should last for the next few days but then dissipate," said Mark McCormick, currency strategist at Brown Brothers Harriman in New York. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Take a Look on euro zone debt crisis: [ID:nLDE68T0MG] Scenarios on euro zone crisis: [ID:nLDE6B50PA]
Graphics package on Europe's struggle with debt:
r.reuters.com/hyb65p PDF on yuan offshore market: r.reuters.com/byg28q
EYES ON EUROPE, COMMODITIES
Euro zone policymakers have yet to show financial markets that they can decisively resolve the region's debt problem. Concerns remain that the debt crisis could spread from Greece and Ireland to Portugal and possibly Spain.
After a five-hour meeting, the bloc's finance ministers said late on Monday they would be taking no new steps to tackle the contagion, saying an existing emergency fund was sufficiently big and that a proposal to issue euro zone bonds had not even been broached. [ID:nLDE6B525H]
German Chancellor Angela Merkel, speaking in Berlin, rebuffed calls for a bigger financial safety net or joint euro bonds.
Commodities, meanwhile, shed some gains after touching multiyear or record highs as macroeconomic factors and a firmer euro boosted prices.
Copper CMCU3 rallied to a record high above $9,000 a tonne before easing to $8,948 on rising demand expectations for 2011 against a backdrop of tight supply and a softer dollar.
U.S. light sweet crude oil CLc1 fell 47 cents, or 0.53 percent, to $88.91 per barrel after rising above $90 a barrel for the first time in 26 months.
Spot gold prices XAU= fell $10.90, or 0.77 percent, to $1412.10 after touching a record high at $1,430.95 an ounce, driven by fund buying ahead of year-end, the prospect of more U.S. monetary easing and investor nervousness over the European debt crisis.
U.S. government bond prices stumbled as the proposed extension of tax cuts raised concerns over inflation and the federal government's ability to meet its long-term debt burden.
The benchmark 10-year U.S. Treasury note US10YT=RR was down 41/32, with the yield at 3.0805 percent. The 2-year U.S. Treasury note US2YT=RR was down 3/32, with the yield at 0.4682 percent. The 30-year U.S. Treasury bond US30YT=RR was down 56/32, with the yield at 4.3427 percent. (Additional reporting by Julie Haviv, Richard Leong, Leah Schnurr in New York and Harpreet Bhal, Michael Taylor, Jan Harvey in London; Editing by Kenneth Barry)