(Updates with oil's closing price, adds analyst comment)
By Elizabeth Dilts Marshall
NEW YORK, May 26 (Reuters) - World shares rose on Thursday and treasury yields edged higher, after minutes from the latest U.S. Federal Reserve meeting indicated the central bank would remain flexible on rate hikes later in the year to address inflation.
The MSCI's benchmark for global stocks was up 1.5% at 3:30 p.m. EDT (1930 GMT). Europe's pan-regional STOXX 600 equity benchmark index rose 0.78%, while the MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.08%.
The Dow Jones Industrial Average rose 550.46 points, or 1.71%, to 32,670.74, the S&P 500 gained 77.98 points, or 1.96%, to 4,056.71 and the Nasdaq Composite added 289.86 points, or 2.53%, to 11,724.60.
The minutes of the Fed's May meeting, released on Wednesday, showed a majority of Fed officials backed rate hikes of 50 basis points each in June and July to combat inflation, and in September would reevaluate.
"The Fed locked itself into delivering a couple half-point rate increases until the Jackson Hole Symposium, and that has removed the risk of aggressive tightening in the short term," OANDA analyst Edward Moya said.
Data on Thursday showed the number of Americans filing new claims for unemployment benefits fell more than expected last week as the labor market remains tight, while a separate report confirmed the U.S. economy contracted in the first quarter.
In Asia, Chinese blue chips reversed earlier losses to rise 0.25% after struggling to find direction for most of the session, as investors fretted over signs of a slowdown but took comfort in comments from Premier Li Keqiang on stabilizing the ailing economy.
South Korea's central bank raised interest rates for a second consecutive meeting as it grapples with consumer inflation at 13-year highs.
In foreign exchange markets, the dollar fell closer to the one-month low hit on Tuesday. The dollar index fell 0.225%, with the euro up 0.37% at $1.0719.
U.S. Treasury yields edged up on Thursday after the benchmark 10-year note hit a fresh six-week low, with inflation fears continuing to dissipate as macro data and corporate announcements point to slower economic growth.
The yield on 10-year Treasury notes rose 2.3 basis points to 2.770% after falling to 2.706% early in the session.
"The 10-year treasury was almost at 3% and has pulled back,” said Clark Kendall, president and CEO of Kendall Capital. "That is an indication that the market feels like the Fed is addressing the inflation problem."
In commodities, Brent futures rose $3.37, or 3.0%, to settle at $117.40 a barrel, while U.S. West Texas Intermediate (WTI) crude rose $3.76, or 3.4%, to settle at $114.09.
U.S. gold futures settled up 0.07% at $1,847.6.
(Reporting by Elizabeth Dilts Marshall, Danilo Masoni in Milan and Andrew Galbraith in London Additional reporting by Vidya Ranganathan Editing by Emelia Sithole-Matarise, Jonathan Oatis and Matthew Lewis)