* World stocks extend gains
* Damage from Irma seen less than feared
* North Korea tensions ease
* Dollar steady, euro edges higher
* European shares rise, U.S. stocks futures gain (Updates with latest prices and market comments)
By Kit Rees
LONDON, Sept 12 (Reuters) - World stocks climbed to record highs on Tuesday as an easing in tensions over North Korea and signs that Hurricane Irma was causing less damage than feared in the United States boosted risk appetite.
The MSCI All Country World Index edged up 0.2 percent, building on Monday’s 0.9 percent gain — its fourth-biggest so far this year.
The pan-European STOXX 600 index jumped to a one-month peak as insurers made further headway and basic resources and financials joined in the rally.
MSCI World’s insurer index gained 0.3 percent, as insured property losses from Hurricane Irma’s are expected to be smaller than initially forecast.
“Whilst the damage is bad, it’s not quite as bad as many people expected,” said James Butterfill, head of research and investment strategy at ETF Securities. He said government spending in the aftermath of natural disasters often boosts riskier assets such as stocks over the long term.
U.S. President Donald Trump signed a bill on Friday that included $15.25 billion in hurricane-related aid.
Wall Street stocks futures rose, with the S&P 500 eyeing a fresh all-time high after hitting a record closing level in the previous session.
Oil prices were on the back foot, however, as refineries restarted in the wake of Hurricane Harvey.
Britain’s blue chip FTSE 100 index was a noticeable laggard, dropping 0.2 percent into negative territory as sterling surged more than half a percent after British consumer price inflation hit its highest level in five years.
The strong reading put the spotlight on the Bank of England’s policy decision on Thursday. The central bank has been struggling to keep inflation at 2 percent since sterling tumbled in June 2016 in response to Britain voting to leave the European Union.
Another market focus on Tuesday will be the launch of Apple Inc’s next-generation iPhone — whose sales will have repercussions beyond Apple for many suppliers as well as its rivals.
Helping to drive the uptick in risk appetite was relief that North Korea did not test-fire missiles or conduct nuclear weapon tests over the weekend as some had feared.
The U.N. Security Council on Monday unanimously stepped up sanctions against North Korea over its sixth and most powerful nuclear test, imposing a ban on its textile exports and capping its imports of crude oil. (nL4N1LT1JX)
“The measures did not include an outright ban on oil supplies to the regime, so the threat of an immediate military confrontation appears to have eased for now,” said Mutsumi Kagawa, chief global strategist at Rakuten Securities.
The risk-on mood dented appetite for traditional safe-haven assets such as U.S. Treasury bonds and gold, which gave back most of their recent gains.
The yield on 10-year U.S. Treasuries jumped to 2.1515 percent from 2.1250 percent, while gold dropped to $1,326.31 per ounce, having hit a one-year peak of $1,357.4 on Friday.
The sharp gains in U.S. bond yields supported the battered dollar, which held steady against its currency basket, but eased slightly to $1.1959 against the euro.
The dollar’s resilience put pressure on copper prices, with the benchmark contract down 1 percent as funds cut bets on higher prices. The metal has rallied around 20 percent so far this year.
Additional reporting by Hideyuki Sano in Tokyo; Editing by Kevin Liffey