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REFILE-GLOBAL MARKETS-Equities gain, dollar weakens on rising U.S. inflation

(Fixes MSCI link in paragraph 7)

* U.S. consumer inflation surges in April

* Benchmark 10-year yields trades lower

* Oil prices gain as Iran supply worries ease

* Graphic: Global asset performance tmsnrt.rs/2yaDPgn

* Graphic: World FX rates tmsnrt.rs/2egbfVh

NEW YORK, May 28 (Reuters) - Global equity markets rose while the U.S. dollar retreated against major currencies on Friday as new data affirmed concerns of a surging inflation and further strengthening of economic activity from pent-up demand.

U.S. Commerce Department report showed on Friday that consumer prices accelerated 3.1% in the year to April, blowing past the Federal Reserve’s 2% target and posting its largest annual gain since 1992.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, also rose at a 11.3% annualized rate in the first quarter, positioning the economy for strong growth as rising vaccinations eases COVID-19 pandemic’s grip.

The dollar index of major currencies weakened 0.017% to 89.997 after making gains in early morning trading.

The benchmark U.S. 10-year Treasury yield was lower at 1.5875% from 1.61% late on Thursday.

“It’s another indication that we continue to see accelerating inflation remains a concern to many investors, but the markets are showing us that people are comfortable with it” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.

MSCI’s broadest index of world stocks rose 0.54% to 712.78. European stocks gained 0.57% to 448.98.

Investors have watched this week as multiple Federal Reserve officials came out to calm inflation jitters ahead of the release of Friday’s report and signal a possible start to talks about tapering stimulus.

On Thursday, Fed’s vice chair for supervision, Randal Quarles, joined the chorus, saying he was “fully committed” to keeping monetary policy running at full throttle while jobs recover.

All major indexes were making gains on Wall Street in the early afternoon, led by technology, healthcare, and consumer discretionary stocks.

The Dow Jones Industrial Average rose 0.36%, to 34,587.63, the S&P 500 gained 0.34%, to 4,215.05 and the Nasdaq Composite added 0.56%, to 13,813.82.

Overnight in Asia, Tokyo’s Nikkei leapt more than 2%, while MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.46%

“The market is taking the Fed at it’s word for the time being, but if the numbers keep coming like this that narrative will be challenged, as only scaling back asset purchases may not be enough,” said Brian Price, head of investment management at Commonwealth Financial Network in Boston.

Gold reversed course and turned positive on Friday, briefly popping above the key $1,900 level, after data showed rising U.S. consumer prices in April and boosted bullion’s appeal as an inflation hedge.

Spot gold rose 0.15% to $1,898.84 per ounce, having earlier dipped as much as 0.8%. It is on course for its fourth straight weekly gain, up 0.9%.

Oil prices inched higher on Friday, with Brent holding near $70 a barrel as strong U.S. economic data and expectations of a rebound in global demand outweighed concerns about more supply from Iran once sanctions are lifted.

Brent was up 33 cents, or 0.5%, at $69.79 a barrel, and U.S. West Texas Intermediate crude rose 11 cents, or 0.15%, to $66.95 a barrel.

Reporting by Chibuike Oguh in New York; editing by David Evans

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