* MSCI world shares index gain slightly
* Travel, airline shares gain in Europe, US
* 10-yr U.S. bond yields pull back from 13-month peak
* U.S. dollar rises as caution reigns ahead of Fed (Updates with latest prices)
NEW YORK, March 15 (Reuters) - World stock markets rose on Monday and benchmark U.S. bond yields slipped from 13-month highs as investors looked to the U.S. central bank’s meeting later in the week.
Wall Street’s main indexes rallied in late afternoon trade after the benchmark S&P 500 closed at another record high, while European shares were flat after rising to pre-pandemic levels, with travel shares gaining in both regions.
MSCI’s gauge of stocks across the globe gained 0.37%.
The Federal Reserve’s two-day policy meeting ending on Wednesday is in focus with rising bond yields and concerns over a pickup in inflation. Fed policymakers are expected this week to forecast that the U.S. economy will grow in 2021 at the fastest rate in decades.
“I think there is still a bias toward accelerating economic growth,” said David Joy, chief market strategist at Ameriprise Financial.
On Wall Street, the Dow Jones Industrial Average rose 174.82 points, or 0.53%, to 32,953.46, the S&P 500 gained 25.6 points, or 0.65%, to 3,968.94 and the Nasdaq Composite added 139.84 points, or 1.05%, to 13,459.71.
Airline shares rose as the companies pointed to concrete signs of an industry recovery as a slowing COVID-19 pandemic helps leisure bookings.
Germany, France and Italy said they would hit pause on AstraZeneca COVID-19 shots after several countries reported possible serious side-effects, throwing Europe’s already struggling vaccination campaign into disarray.
The pan-European STOXX 600 index was flat, after touching its highest level since February 2020, with travel stocks gaining.
The $1.9 trillion stimulus President Joe Biden signed into law last week, expected improving economic data and the rollout of COVID-19 vaccinations supported gains, even as investors were attuned to the outlook for monetary policy.
Longer-term U.S. Treasury yields fell as the market looked ahead to the Fed meeting and the latest government debt auctions.
The benchmark 10-year yield, which reached 1.642% on Friday, was last down 2.8 basis points at 1.6073%.
Rising inflation expectations could prompt the Federal Open Market Committee to signal it will start raising rates sooner than expected.
“Following the fiscal stimulus packages it is inevitable that Fed GDP forecasts will be revised up, and some FOMC members might think rates will have to move higher sooner than they anticipated last December,” economists at ANZ said.
In currencies trading, the dollar gained as traders cut their bearish bets on the greenback to four-month lows amid the recent rise in U.S. Treasury yields.
The dollar index rose 0.109%, with the euro down 0.18% to $1.1933.
Oil prices slipped, pulling back from earlier gains bolstered by strong Chinese economic news, because of concerns about potential U.S. tax increases to pay for infrastructure spending.
U.S. West Texas Intermediate crude for April settled at $65.39 a barrel, down 22 cents. Brent crude futures for May settled at $68.88 a barrel, losing 34 cents.
Additional reporting by Medha Singh and Shashank Nayar in Bengaluru, Danilo Masoni in Milan; editing by Dan Grebler, Nick Zieminski and Cynthia Osterman