GLOBAL MARKETS-Dow, S&P 500 hit record highs on greater risk tolerance

* S&P 500 hits record intraday high of 2,151.96

* Dow industrials hit record intraday high of 18,353.76

* STOXX Europe 600 up for fourth straight session

* Treasury yields rise on anticipation of new Japan stimulus

* Dollar hits more than two-week high vs. yen (Updates to open of U.S (Other OTC: UBGXF - news) . markets; changes byline, dateline, pvs LONDON)

By Sam Forgione

NEW YORK, July 12 (Reuters) - The U.S. S&P 500 and Dow Jones industrial average stock indexes set record intraday highs on Tuesday after reduced global political tensions and upbeat corporate results from Alcoa (NYSE: AA - news) boosted risk appetite, while European shares also rallied.

The benchmark S&P 500 hit 2,151.96, topping Monday's intraday record high by about 8 points, while the Dow rose to 18,353.76 to top its previous record intraday high touched in May 2015. The tech-heavy Nasdaq Composite also gained, wiping out its losses for the year.

Increasing prospects of global economic health boosted shares, while Alcoa reported a smaller-than-expected drop in quarterly profit, sending the aluminum producer's shares up more than 4 percent and helping boost optimism about the earnings season.

Investors' appetite for equities has increased after robust economic data, including a stronger-than-expected U.S. jobs report for June last Friday, and low yields on government bonds. Easing political tensions in Britain and Japan have reduced some global uncertainties.

The STOXX Europe 600 was up for a fourth straight session after posting its highest close on Monday since Britain voted to leave the European Union on June 23. Gains in shares of Italian banks helped fuel the rise, with UniCredit (EUREX: DE000A163206.EX - news) last up more than 13 percent.

"What is driving the market today is political stability in both Japan and the UK and a global drive for yield, which central banks are going to support," said John Brady, a senior vice president at R.J. O'Brien & Associates in Chicago.

MSCI (NYSE: MSCI - news) 's all-country world equity index was last up 0.83 percent at 408.24.

The Dow Jones industrial average was last up 87.46 points, or 0.48 percent, at 18,314.39. The S&P 500 was up 11.55 points, or 0.54 percent, at 2,148.71. The Nasdaq Composite was up 30.74 points, or 0.62 percent, at 5,019.38.

Europe's broad FTSEurofirst 300 index was last up 0.97 percent, at 1,328.27.

Safe-haven assets such as U.S. Treasuries, the Japanese yen and gold fell in price. Benchmark 10-year Treasury yields, which move inversely to prices, hit a 1-1/2-week high of 1.503 percent earlier.

Yields rose as expectations of new stimulus in Japan boosted stocks and reduced demand for safe haven bonds, and ahead of the Treasury Department's auction of $20 billion in 10-year notes.

"Some of the uncertainty, 'flight-to-quality' type of unknown bid is leaving the markets," said Tom Tucci, head of Treasuries trading at CIBC in New York.

The U.S. dollar hit its highest level in more than two weeks against the yen of 104.65 yen on the global risk appetite and anticipation of more Japanese stimulus. The euro was last 0.3 percent higher against the dollar, however, at $1.1087. Gold (Other OTC: GDCWF - news) fell for a second straight day.

Crude futures bounced back from two-month lows, helped by a weaker dollar, but an oil inventory glut and a drop in bullish bets by investors weighed on prices.

Brent crude was last up $1.20 at $47.45 a barrel. U.S. crude was last up $1.01 at $45.77 per barrel. (Additional reporting by Vikram Subhedar in London, Yashaswini Swamynathan in Bangalore and Karen Brettell and Richard Leong in New York; Editing by Nick Zieminski)