* S&P near flat in afternoon trading
* Fed expected to unveil balance sheet trim this week
* Dollar up against the yen (Updates with U.S. oil price settlement)
By Caroline Valetkevitch
NEW YORK, Sept 18 (Reuters) - A world stock index was up slightly on Monday and the dollar rose to a more-than seven-week peak against the yen as investors awaited clues from the U.S. Federal Reserve on the timing of further rate hikes and tensions over North Korea eased.
The S&P 500 was nearly flat, cutting early gains following a decline in tech shares. MSCI's index of world stocks < .MIWD00000PUS> was up 0.1 percent after earlier touching an intraday record high.
A relatively quiet North Korea and U.S. Secretary of State Rex Tillerson's comments on a "peaceful solution" over the weekend eased some concerns for investors.
But an address by U.S. President Donald Trump to world leaders at the United Nations on Tuesday and elections in Germany and New Zealand will add extra political uncertainty to the mix this week.
The main event, however, will be the Fed's meeting on Tuesday and Wednesday, at which it is likely to take another step toward policy normalization in what is rapidly becoming a worldwide trend.
The central bank is expected to announce plans to begin unwinding its $4.2 trillion portfolio of Treasuries and mortgage-backed securities, nearly a decade after the global financial crisis.
This prospect may be prompting the sell-off in sectors such as utilities, while it is boosting banks, said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco.
"There's momentum in the market. There's lots of cash. Even though the Fed's about to reduce their balance sheet you continue to have incredibly aggressive monetary policy. That continues to lead to money flowing into the market almost in an indiscriminate fashion," he said.
Investors are far from persuaded the Fed will move on rates again this year, with a December change put at less than a 50 percent probability in the futures market.
Benchmark 10-year Treasury notes were last down 7/32 in price to yield 2.226 percent. The yield fell to 2.016 percent on Sept. 8, the lowest since Nov. 10, 2016.
The dollar was up 0.5 percent against the Japanese currency at 111.38 yen.
The Bank of Japan is widely expected to maintain its massive asset buying campaign at a meeting on Thursday.
Political uncertainty may have a part to play in the BOJ's thinking. Sources told Reuters on Sunday that Japanese Prime Minister Shinzo Abe was considering calling a snap election for as early as next month to take advantage of his improved approval ratings and disarray in the main opposition party.
Canada has already raised interest rates twice in recent months, while the Bank of England shocked many last week by flagging its own coming increases. The European Central Bank, meanwhile, is expected to shed more light on plans to exit its extraordinary stimulus next month.
In the U.S. stock market, the Dow Jones Industrial Average rose 83.38 points, or 0.37 percent, to 22,351.72, the S&P 500 gained 3.96 points, or 0.16 percent, to 2,504.19 and the Nasdaq Composite added 5.37 points, or 0.08 percent, to 6,453.84. The pan-European FTSEurofirst 300 index was up 0.3 percent.
Shares of Amazon.com were down 1.4 percent. Amazon Web Services said it will start charging its customers by the second for use of its popular EC2 virtual slices of servers in its data centers, according to a CNBC report. Shares of Google were down 0.6 percent.
On Friday, the benchmark S&P 500 index closed at a record high, hitting the 2,500 level for the first time.
Talk of monetary tightening and a bounce in the dollar put gold on the defensive. Gold hit a 2-1/2 week low, with spot gold down 0.6 percent at $1,311.51 an ounce.
U.S. crude oil prices slipped below $50 per barrel but stayed close to multi-month highs as refineries in Texas continued to restart after Hurricane Harvey.
U.S. crude futures rose 2 cents to settle at $49.91, while Brent crude futures were down 32 cents at $55.44.
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 Saqib Iqbal Ahmed and Sinead Carew in New York, John Geddie in London, Sruthi Shankar in Bengaluru and Wayne Cole in Sydney; Editing by Jeremy Gaunt and Dan Grebler