GLOBAL MARKETS-World stocks rise, copper hits record

* World stocks up, hovering near 29-month highs

* U.S. 10-year Treasury yields hit highest since May

* Copper rallies to record high, oil eases (Updates with U.S. markets open, comment, prices)

By Manuela Badawy and Dominic Lau

NEW YORK/LONDON, Feb 7 (Reuters) - World stocks rose on Monday, touching a 29-month high on merger news, rising commodity prices and flows into developed economies as investors bet on a stronger global economy.

Copper and tin hit record highs and U.S. 10-year Treasury yields rose to levels not seen since May. The higher yields supported the dollar, which rose to two-week highs against the euro after a bigger-than-expected fall in German industrial orders prompted investors to book profits on the single currency's new year rally.

The political turmoil in Egypt kept traders glued to their televisions and computers, but it took a backseat when putting money to work in risky assets such as equities.

World equities as measured by the MSCI All-Country World Index <.MIWD00000PUS> advanced 0.33 percent after gaining 2.2 percent last week. The index is up 3.4 percent so far this year, while the MSCI emerging markets index is down 2 percent.

U.S. stocks were higher, with the Standard & Poor's 500 Index <.SPX> hitting its highest since June 2008.

"Despite the recent gains, stock prices are still attractive on a relative basis," said Steve Goldman, market strategist at Weeden & Co in Greenwich, Connecticut.

"We're in the face of the cycle that suggests stocks prices hold better value than other asset classes."

The Dow Jones industrial average <.DJI> was up 49.20 points, or 0.41 percent, at 12,141.35. The Standard & Poor's 500 Index <.SPX> was up 6.34 points, or 0.48 percent, at 1,317.21. The Nasdaq Composite Index <.IXIC> was up 13.42 points, or 0.48 percent, at 2,782.72.

Merger news lifted U.S. stocks. Diversified industrial company Danaher Corp agreed to buy medical diagnostics company Beckman Coulter Inc , and oil drilling company EnsCo Plc plans to buy rival Pride International Inc .

The deals provided the latest indication stock valuations are considered attractive.

The FTSEurofirst 300 <.FTEU3> index of top European shares neared a two-and-a-half year high to trade up 0.91 percent, extending Friday's rise on the back of Asian and U.S. gains.

Concerns over higher inflation in booming emerging markets, further indications of economic recovery gathering pace in the United States, modest valuations and tentative signs of stability in the euro zone sovereign debt crisis have fueled the outperformance of shares in developed markets.

Data from fund tracker EPFR Global showed investors pulled out $7 billion from emerging markets equity funds in the week of Feb 2, their biggest outflow in three years, and much of the money is flowing into developed markets.

The euro hit a two-week low, falling below key support at the 100-day simple moving average near $1.3523 as German industrial orders fell 3.4 percent in December. Orders, which economists had expected to fall 1.5 percent, were down on weak demand outside the euro zone. For details, see [ID:nLDE7160ZR]

The dollar was up against a basket of major currencies, with the U.S. Dollar Index <.DXY> up 0.28 percent at 78.261. Against the Japanese yen, the dollar was up 0.16 percent at 82.30.

TREASURY YIELDS UP

U.S. Treasury debt yields rose to levels seen last spring with the 30-year yields briefly piercing 4.75 percent. Dealers said Treasury prices, which have been falling for several days on views the economy and inflation were accelerating, were further weighed down in anticipation of new supply this week.

The benchmark 10-year U.S. Treasury note was down 6/32, with the yield at 3.6641 percent. The 2-year U.S. Treasury note was down 2/32, with the yield at 0.7805 percent.

In energy and commodities prices, copper hit a record at $10,160. Concerns about supply, especially from top producer Chile, and a recent stream of positive economic data that boosted the outlook for industrial metals demand combined to push prices higher.

Tin also hit a record high on worries about supply problems in top exporter Indonesia.

U.S. crude oil fell 0.29 percent, to $88.77 per barrel, and spot gold prices rose 0.07 percent, to $1349.90 an ounce. (Additional reporting by Rodrigo Campos, Richard Leong, Gertrude Chavez-Dreyfuss; Editing by Andrea Ricci)