* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
* Investors relieved as Yellen sounds less-than-hawkish
* MSCI world index hits record high
* Asia ex-Japan highest since 2015, S.Korea and India hit records
* China June exports and imports both beat forecasts
* Europe stocks consolidate after best day since French election Bonds rally as market wagers on very gradual Fed tightening
* Canadian dollar surges as BoC hikes, opens door to more
By Marc Jones
LONDON, July 13 (Reuters) - World shares hit their fourth all-time high in less than a month on Thursday but a rally in bonds was halted by fresh speculation that the European Central Bank will soon start winding down its 2 trillion euro money printing programme.
For most of the day the mood had been one of relief that U.S. Federal Reserve Chair Janet Yellen had not sounded more hawkish in her appearance before Congress the previous day, a green light for risk-taking.
Wall Street started steadily after another record peak for the Dow Jones Industrial Average while the dollar steadied just off a nine-month low just in time for day two of Yellen's semi-annual Washington grilling.
But bond markets were in the red again after the Wall Street Journal reported that the ECB is likely to signal in September that its asset purchase programme will be gradually wound down next year.
Yields on U.S. Treasuries, which move inversely to prices, crept higher and Germany's benchmark 10-year bond yield gave up all of its early falls to move back above 0.50 percent.
Currency markets churned too. The euro climbed to $1.1415 from as low as $1.1370, hit after earlier ECB policymaker talk of extending stimulus. It had been as high as $1.1489 in Asia after Yellen side-swiped the dollar.
The WSJ report "has focused attention again on that the ECB is going to be taking steps in a more hawkish direction," said TD Securities European head of FX strategy Ned Rumpeltin, also citing news that ECB President Mario Draghi will address the Jackson Hole central banking conference next month.
The star performer overnight had been the Canadian dollar, which rocketed to 11-month highs after the country's central bank hiked interest rates for the first time in seven years and left the door wide open to further moves.
Sentiment got another boost when China reported upbeat data on exports and imports for June, the latest sign that global trade is finding some traction again.
It had helped push Asian shares up more than 1 percent and lift MSCI's 47-country world index to its latest record high, and though it took a while, Europe's main bourses eventually muscled higher too.
Traders there began hoovering up banks and commodity stocks again after a 1.6 percent gain on Wednesday had given the regional STOXX 600 its best day since April's French election victory for Emmanuel Macron.
"It mostly seems to be down to Yellen," Rabobank quantitative analyst Bas Van Geffen said.
One of the Fed chief's comments that markets latched onto was her view that the U.S. central bank would not need to raise rates "all that much further" to reach current low estimates of the "neutral" funds rate.
Equities were also underpinned by the overnight drop in bond yields as Yellen sounded cautious on inflation. Indeed, markets doubt even that modest Fed tightening will ensue and imply only a 50-50 chance of a interest rate rise by December.
Treasuries had rallied in reaction, with yields on two-year notes falling to three-week lows before the ECB talk turned markets around.
Up until that point the odd one out had been Canada, where yields hit their highest since late 2013 after the Bank of Canada raised rates by quarter of a point, saying the economy no longer needed as much stimulus.
The Canadian dollar notched its biggest percentage gain since March 2016 and was last trading near one-year peaks at C$1.2726. The Aussie and Kiwi dollars jetted higher too.
The main loser was the U.S. dollar which slipped as far as 112.86 on the yen before recovering back to 113.32.
Against a basket of currencies, the dollar was still within a whisker of nine-month lows at 95.75 as it levelled off in early U.S. trading.
The moves in U.S. yields benefited gold, which pays no interest, and pushed the precious metal up 0.3 percent to $1,223.16 and away from its recent trough of $1,204.45.
Oil prices flatlined as producer club OPEC said it expected demand to decline next year as rivals pump more, though the Chinese trade data showed it remained a heavy buyer.
Brent crude futures were up 10 cents at $47.85 a barrel, while U.S. crude added 18 cents to $45.68.
Asia's share market gains had also lifted Indian stocks to an all-time high. South Korea and Australia's main indexes both climbed 1.1 percent too, the former helped as its central bank kept interest rates at a record low.
Japan's Nikkei had been restrained by a firmer yen and ended flat, though emerging market stocks stood tall as they climbed to a new 26-month high on the Fed's soothing signals.
"Dollar positioning is short and yesterday's testimony just confirmed what the market believed: that the Fed is not going to be able to be as hawkish as they are suggesting," said Athanasios Vamvakidis, head of G10 FX strategy with Bank of America Merrill Lynch in London.
For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
Additional reporting by Wayne Cole in Sydney and Patrick Graham in London; Editing by Catherine Evans