(Adds U.S. market open, byline, dateline; previous LONDON)
* European shares snap seven-day losing streak
* Bond yields rise on strong growth outlook, inflation fears
* Oil rises as global markets stabilize
NEW YORK, Feb 12 (Reuters) - World shares rallied on Monday in a broad advance that brushed off fresh rises in global bond yields that have been driven by inflation fears as investors shifted asset allocations after the worst week in global markets in the past two years.
The yield on U.S. five-year Treasury Inflation Protected Securities, bonds known as TIPS that are designed to protect against inflation, rose to its highest level since 2009 as concerns about rising consumer prices and a bigger U.S. budget deficit sparked a selloff in fixed income markets.
The dollar fell against the euro following its best week against the single currency in nearly 15 months. A return of risk appetite hurt the U.S. currency and helped higher-yielding emerging market currencies as well as commodity-linked currencies like the Australian and Canadian dollars.
Volatility picked up, with the major indexes on Wall Street climbing more than 1 percent shortly after the open, paring about half the advance to once again rise more than 1 percent.
MSCI's all-country world index of stock performance in 47 countries rose 0.95 percent, led by Apple Inc and Amazon.com.
The pan-European FTSEurofirst 300 index rose 1.33 percent while MSCI's gauge of emerging market stocks rose 0.92 percent.
A major shift in outlook is taking place that involves the reallocation across different areas and sectors of the market, said Peter Kenny, senior market strategist at Global Markets Advisory Group, in New York.
"We're at an inflection point in the market," Kenny said. "It's very significant for a lot of reasons. It involves fear of inflation, a long overdue and much-anticipated pullback, and it involves elevated equity valuations," he said.
The Dow Jones Industrial Average rose 291.75 points, or 1.21 percent, to 24,482.65, the S&P 500 gained 26.62 points, or 1.02 percent, to 2,646.17 and the Nasdaq Composite added 88.03 points, or 1.28 percent, to 6,962.52.
U.S. Treasury yields rose across most maturities, with the benchmark 10-year note hitting a four-year high. The prospect of strong U.S. economic growth and global central banks normalizing years of easy monetary policy drove yields higher.
The 10-year Treasury note fell 7/32 in price to yield 2.8585 percent after earlier hitting 2.902 percent.
Euro zone government bond yields edged higher on signs that policymakers, with their eyes on inflation, will maintain a monetary tightening path regardless of equity market volatility.
Germany's 10-year bond yields, the euro zone's benchmark, traded around 0.76 percent after earlier rising as high as 0.786 percent.
The dollar index fell 0.18 percent, with the euro up 0.29 percent to $1.2269. The Japanese yen strengthened 0.13 percent versus the greenback at 108.67 per dollar.
Oil began to recoup some of last week's steep losses as global equities steadied.
Brent crude futures rose 30 cents to $63.09 a barrel and U.S. West Texas Intermediate crude futures for March delivery rose 51 cents to $59.71 a barrel.
(Reporting by Herbert Lash; Editing by Nick Zieminski)