* World stocks reach record high
* Fed widely seen hiking interest rates for third time in 2017
* Dollar, yields fall after CPI disappoints (Updates to U.S. open; changes byline, dateline, previously LONDON)
NEW YORK, Dec 13 (Reuters) - Stocks globally reached a record high on Wednesday ahead of a widely expected interest rate increase by the U.S. Federal Reserve, while U.S. Treasury yields fell on disappointing inflation data.
MSCI's gauge of stocks across the globe also rose to a record high, gaining 0.31 percent.
The Fed is expected to raise rates to between 1.25 and 1.50 percent during a two-day policy meeting ending Wednesday. The central bank might also comment on how the Trump administration's tax overhaul could affect the U.S. economy.
"I suspect that they (the Fed) will probably elaborate on the tax cuts and future spending of the infrastructure and how they will relate to future inflation," said Peter Cardillo, chief market economist at First Standard Financial in New York.
Wall Street indexes advanced, with the S&P 500 and the Dow reaching record highs as technology stocks gained. Western Digital rose 2.83 percent after the data storage device company agreed to settle a dispute with Toshiba.
The Dow Jones Industrial Average rose 113.5 points, or 0.46 percent, to 24,618.3, the S&P 500 gained 6.55 points, or 0.25 percent, to 2,670.66 and the Nasdaq Composite added 29.12 points, or 0.42 percent, to 6,891.44.
The pan-European FTSEurofirst 300 index fell 0.24 percent.
In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan climbed 0.73 percent.
Japan's Nikkei stock index finished 0.47 percent lower, however, pressured by a strengthening yen and shrugging off upbeat economic data that showed Japanese core machinery orders rose a more-than-expected 5 percent in October.
YIELDS, DOLLAR INDEX FALLS
U.S. Treasury yields fell as an increase in core consumer prices in November fell short of analysts' expectations, reducing bets on a broad pickup in inflation.
Benchmark 10-year notes last rose 7/32 in price to yield 2.3797 percent, compared with 2.403 percent late on Tuesday.
The 30-year bond last rose 19/32 in price to yield 2.7522 percent, compared with 2.781 percent late on Tuesday.
Earlier Wednesday data showed the consumer price index, the government's broadest inflation gauge, grew 0.4 percent last month, matching economists' estimates.
However the CPI core rate, which excludes energy and food prices, moderated to 0.1 percent from a 0.2 percent increase in October and below market expectations.
Traders also mulled the potential implications of Democrat Doug Jones' victory in the special U.S. Senate election in Alabama on Tuesday. As a result of the election, the Republicans' Senate majority thinned to 51-49, raising discussion about the Republicans' ability to pass tax legislation before year-end.
The dollar index, which weighs the greenback against a basket of currencies, fell 0.26 percent, while the euro was up 0.19 percent to $1.1762.
The Japanese yen strengthened 0.45 percent against the greenback to 113.05 per dollar, while sterling was last trading at $1.3364, up 0.37 percent on the day.
Italian bonds were firmly in play. Yields jumped on reports a long-anticipated national election will be held on March 4, raising concerns about political stability.
U.S. crude fell 0.39 percent to $56.92 per barrel and Brent was last at $62.79, down 0.87 percent on the day.
Spot gold added 0.4 percent to $1,247.95 an ounce.
(Reporting by Stephanie Kelly; additional reporting by Marc Jones, Rama Venkat Raman and Sruthi Shankar in Bengaluru, Richard Leong and Karen Brettell in New York; Editing by Steve Orlofsky)