GLOBAL MARKETS-Stocks rise on recovery hopes, oil up on weather

* Oil boosted by heating oil demand; gold up

* Dollar hits record low vs Swiss franc, falls vs yen

* Markets volatile, thin in holiday season (Updates with U.S. closing prices, Nikkei futures)

By Manuela Badawy

NEW YORK, Dec 28 (Reuters) - Global stocks edged higher on Tuesday on expectations the U.S. economy is on track for recovery while oil prices edged close to a 26-month high as winter weather drove demand.

The dollar hit a record low against the Swiss franc and tumbled against the yen after Japan reported its factory output rose in November for the first time in six months.

U.S. Treasury prices fell after a weak $35 billion auction of five-year notes and ahead of an auction of seven-year notes on Wednesday.

Trading volumes in all markets were light due to the post-Christmas holiday and as the northeastern United States dug out from a blizzard that disrupted travel.

"Data in recent weeks have been supportive of the stocks and commodity markets globally," said David Cohen, director of Asian Economic Forecasting at Action Economics. "The U.S. will avoid a double-dip. The Asian region, including Japan, looks a little bit better, with its industrial production finally showing an increase."

In New York, the Dow and S&P 500 ticked higher as the cold weather in the Northeast lifted oil prices and energy shares.

The MSCI All Country World index <.MIWD00000PUS> rose 0.16 percent while the Thomson Reuters global stock index <.TRXFLDGLPU> gained 0.02 percent.

But investors were reluctant to take large new positions after weaker-than-expected U.S. data on consumer confidence and home prices.

U.S. single-family homes fell almost double the expected pace in October, according to S&P/Case Shiller home prices indexes, while a report from the Conference Board, an industry group, showed an unexpected deterioration of consumer confidence in December as worries about jobs increased. For details, see [ID:nNLLRNE6QV] [ID:nN28126497]

Despite the disappointing data, "it's not impacting the market so much due to the light volume and lack of activity," said Peter Cardillo, chief market economist at Avalon Partners in New York.

The Dow Jones industrial average <.DJI> closed up 20.51 points, or 0.18 percent, at 11,575.54. The Standard & Poor's 500 Index <.SPX> was up 0.98 points, or 0.08 percent, at 1,258.52. The Nasdaq Composite Index <.IXIC> was down 4.39 points, or 0.16 percent, at 2,662.88.

Both Chevron Corp and Exxon Mobil touched 52-week highs, with Chevron adding 1.2 percent to $91.19 and Exxon climbing 0.6 percent to $73.42. Both companies are Dow components.

The pan-European FTSEurofirst 300 <.FTEU3> index of top shares closed up 0.3 percent at 1,140.44 points. Volume was extremely low at just one-quarter of the 30-day average. Many traders closed their books for the year, while a holiday in Britain and the bad weather in the U.S. Northeast thinned trading floors. The UK market will reopen on Wednesday.

Shares in Japan and China eased on Tuesday on concerns further Chinese monetary tightening will cool growth in China, which has been the engine of world economic growth. Those worries overshadowed the rise in Japanese factory output in November, which pointed to improving demand.

The front month futures contract for the Nikkei 225 stock index <0#NK:> trading in Chicago fell 30 points to 10.325.

The dollar was flat against major currencies <.DXY>, while the euro fell 0.34 percent at $1.3114 after climbing as high as $1.3274 overnight.

The dollar also hit an all-time low against the Swiss franc at around 0.9435 francs on year-end buying by Swiss corporates.

The yen rallied against the dollar after the Japanese factory data. Against the Japanese yen, the dollar was down 0.43 percent at 82.43.

COMMODITIES RALLY, BONDS EYED

Crude oil prices settled up 0.54 percent at $91.49 a barrel, just shy of the $91.88 reached on Monday -- the highest level since October 2008, boosted by demand for heating oil after one of biggest snowstorms on record hit the U.S. East Coast.

Spot gold prices rose $21.26, or 1.54 percent, to $1,404.80 an ounce.

"Both oil and gold are seeing robust demand. The market seems to have shrugged off the interest-rate hike in China over the weekend," said Dean Popplewell, chief strategist of FX brokerage OANDA in Toronto.

U.S. government bonds were mixed ahead of Wednesday's $29 billion auction of seven-year notes, which will likely need to price at a higher yields to attract interest.

The benchmark 10-year U.S. Treasury note was down 41/32, with the yield at 3.4873 percent. The two-year U.S. Treasury note was up 1/32, with the yield at 0.7512 percent. The 30-year U.S. Treasury bond was down 68/32, with the yield at 4.5299 percent. (Additional reporting by Chuck Mikolajczak, Wanfeng Zhou, and Karen Brettell in New York; Editing by Kenneth Barry and Leslie Adler)