* Wall Street edges up in early trading, extends records
* Fed expected to unveil balance sheet trim this week
* Dollar up against the yen (Updates with early U.S. market activity; changes dateline, previous LONDON)
NEW YORK, Sept 18 (Reuters) - A world stock index hit a record high 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.
U.S. stocks hit records as well, lifted by industrial and financial stocks. MSCI's index of world stocks was up 0.3 percent and touched an all-time 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.
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.
"The primary reason U.S. yields are creeping up is after thinking about it clearly, the market has decided that the Fed is unlikely to change the December 2017 dot - still saying they expect one more rate hike in 2017," said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York.
Benchmark 10-year Treasury notes were last down 6/32 in price to yield 2.222 percent. The yield fell to 2.016 percent on Sept. 8, the lowest level since Nov. 10, 2016.
The dollar was up 0.49 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 79.11 points, or 0.36 percent, to 22,347.45, the S&P 500 gained 6.5 points, or 0.26 percent, to 2,506.73 and the Nasdaq Composite added 27.47 points, or 0.43 percent, to 6,475.94. The pan-European FTSEurofirst 300 index was up 0.3 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 were down 54 cents at $49.35, while Brent crude futures were 65 cents lower at $54.97.
For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.bi z / c m s / ? p a g e I d = l i v e m a r k e t s
(Additional reporting by Saqib Iqbal Ahmed in New York, John Geddie in London, Sruthi Shankar in Bengaluru and Wayne Cole in Sydney; Editing by Jeremy Gaunt and Dan Grebler)