GLOBAL MARKETS-Swiss franc, oil rise on Mideast worries

* US stocks rebound, world stocks hit 30-month highs

* Oil prices advance amid Israel-Iran tensions

* Middle East unrest boosts safe-haven franc, Treasuries (Updates prices, adds details)

By Wanfeng Zhou

NEW YORK, Feb 17 (Reuters) - The safe-haven Swiss franc and U.S. government bonds rallied on Thursday, while crude oil prices rose as unrest in the Middle East and tensions between Israel and Iran escalated.

U.S. stocks, however, shrugged off concerns about the Middle East as investors bought on early dips. World equities measured by the MSCI All-Country World Index <.MIWD00000PUS>, hit more than 2-1/2 year highs.

Bahrain police stormed a square in Manama, killing at least three people as protests in the Middle East and North Africa gathered pace. Clashes were also reported in Libya, while at least 40 were wounded in Yemen in demonstrations against the president's 32-year rule.

Iranian state TV said on Thursday two Iranian warships are due to pass through the strategic Suez Canal in a move that Israel has called a "provocation."

"All in all, the pace of change sweeping the region is truly mind-boggling," said Edward Meir, senior commodity analyst at brokers MF Global.

The U.S. dollar fell 1 percent to 0.9496 Swiss franc , while the euro dropped 0.7 percent to 1.2921 franc .

"If events in the Middle East do escalate we will see safe haven flows which will help the Swiss franc," said Kenneth Broux, market economist at Lloyds.

Benchmark ten-year U.S. Treasury notes last traded up 18/32 in price to yield 3.58 percent, down from 3.62 percent late on Wednesday.

Unrest spreading across the oil-rich Middle East and North Africa stoked fears of a disruption of oil flows.

U.S. crude futures ended higher for a second straight day, after trading as high as $86.50. Brent crude for April delivery earlier climbed above $104 a barrel, before retreating.

Gold, also a safe-haven, rose for a fourth day, its longest winning streak since September. Spot gold hit a five-week high at $1,384.65 an ounce.

STOCKS STILL IN DEMAND

The Dow Jones industrial average <.DJI> ended up 29.97 points, or 0.24 percent, at 12,318.14. The Standard & Poor's 500 Index <.SPX> was up 4.11 points, or 0.31 percent, at 1,340.43. The Nasdaq Composite Index <.IXIC> was up 6.02 points, or 0.21 percent, at 2,831.58.

Wall Street stocks earlier came under pressure after the United States reported the fastest rise in core consumer prices in more than a year in January. But bargain hunters quickly rushed in and pushed the index back near multi-year highs.

The core Consumer Price Index, which excludes volatile food and energy costs, increased 0.2 percent last month after a 0.1 percent rise in December, the Labor Department said. It was the largest increase since October 2009.

"We've run up incredibly over the last six months, and many many onlookers are looking for a pullback, and it just refuses to come," said Andrew Wilkinson, senior market analyst at Interactive Brokers Group in Greenwich, Connecticut.

European shares <.FTEU3> closed at a new 29-month high for the fourth straight day. The MSCI All-Country World Index <.MIWD00000PUS> hit its highest level since the end of July 2008 and last traded up 0.61 percent at 347.03.

The euro edged higher versus the dollar as solid demand at a Spanish debt auction offset broader euro zone banking and sovereign debt concerns. It last traded up 0.3 percent at $1.3606 . (Additional reporting by Edward Krudy, Karen Brettell and Caroline Valetkevitch in New York, Lucia Mutikani in Washington and Dominic Lau in London; Editing by Andrew Hay)