* Stocks surge in global relief rally as Mideast tension eases
* Yen slides to two-week low
* First two-day fall for gold since November
By Herbert Lash
NEW YORK, Jan 9 (Reuters) - Crude oil prices slid and equity markets around the world set new highs on Thursday as investors took on greater risk in a relief rally after the United States and Iran moved to defuse escalating tensions in the Middle East.
Gold prices retreated further from a near seven-year peak scaled after Iran's retaliatory missile strike on military bases housing U.S. troops in Iraq early on Wednesday in response to Friday's U.S. drone strike that killed a top Iranian general and raised fears of a greater regional conflict.
The safe-haven yen fell to more than a one-week low against the dollar.
MSCI's gauge of equity indexes in 49 countries hit an all-time high, as did the pan-regional STOXX 600 index in Europe and the three major stock indexes on Wall Street. The benchmark index in Australia set a record closing high and the main Canadian stock index hit an all-time high.
U.S. President Donald Trump refrained from ordering more military action and Iran's foreign minister said the missile strikes had "concluded" Tehran's response.
Trump's decision helped to soothe markets and increase demand for risk assets, said Brad Bechtel, managing director, Jefferies in New York.
"Trump completely downplayed the idea of going to war with Iran or even any sort of retaliatory measures," Bechtel said.
Neither side wants to further escalate tensions, said Bank of Singapore currency strategist Moh Siong Sim in Singapore.
"All is well - so says Trump! That is the mood today," Sim said.
MSCI's all-country world index gained 0.61%, while the STOXX 600 index rose 0.31%. The MSCI emerging markets index <rose 1.53%.
Germany's trade-sensitive DAX jumped 1.3%, helped by data showing better-than-expected industrial output in November that dispelled lingering worries about a recession in Europe's economic powerhouse.
On Wall Street, the Dow Jones Industrial Average rose 184.95 points, or 0.64%, to 28,930.04. The S&P 500 gained 17.09 points, or 0.53%, to 3,270.14 and the Nasdaq Composite added 58.12 points, or 0.64%, to 9,187.36.
Stocks also got a boost from China's commerce ministry saying Vice Premier Liu He will sign a long-awaited Phase 1 trade deal in Washington next week.
Crude prices slid as the market shifted focus toward a rising inventory of U.S. crude stocks as prices receded to pre-crisis levels of mid-December. Oil prices later pared losses to trade near break-even.
Brent crude futures fell 7 cents to settle at $65.37 a barrel, while West Texas Intermediate settled down 5 cents at $59.56 after tumbling nearly 5% on Wednesday.
Crude oil stocks were up 1.2 million barrels in the week ended Jan. 3 at 431.1 million barrels, the Energy Information Administration said on Wednesday.
The yen, seen as a safe haven in times of geopolitical turmoil because of its deep liquidity as well as Japan's current account surplus, quickly reversed gains made after the Iranian missile strike.
Another safe currency, the Swiss franc, also fell against both the dollar and the euro..
The yen weakened 0.35% versus the greenback at 109.53 per dollar. The dollar index, tracking the unit against six peers, rose 0.14%, with the euro up 0.02% to $1.1105.
Greater risk appetite was also evident in emerging markets. China's trade-exposed yuan reached a five-month high of 6.9281 per dollar, while South Africa's rand and Turkey's lira, which had been buffeted this week, rebounded.
U.S. Treasury yields fell after strong demand at a $16 billion auction of 30-year bonds drove their price higher. The benchmark 10-year note rose 7/32 in price to yield 1.8493%.
U.S. gold futures were down 0.4% at $1,551.73.
Reporting by Herbert Lash, additional reporting by Gertrude Chavez-Dreyfus in New York and Tom Westbrook in Singapore; Editing by Bernadette Baum and Dan Grebler