GLOBAL MARKETS-Emerging Asia propels world stocks to new high

* U.S. dollar edges off 10-month low

* Asian, emerging shares at over two year peak

* World stocks set for longest winning streak since Oct (Shenzhen: 000069.SZ - news) 2015

* Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh (Updates prices, adds comment)

By John Geddie

LONDON, July 19 (Reuters) - A weak U.S. dollar combined with upbeat Chinese data to lift emerging market and Asian shares to levels not seen in more than two years and global stocks to an all-time high on Wednesday.

With (Other OTC: WWTH - news) the world's most widely-used currency near a 10-month low and bond yields slipping, it is cheaper for emerging countries to service their debts investor appetite for riskier assets such as equities has risen.

After decent gains in Asia on the back of positive signs from global economic powerhouse China, MSCI (Frankfurt: 3HM.F - news) 's world stocks index looked set for a ninth day of gains which would mark its longest winning streak since October 2015.

"Most emerging markets are doing quite well at the moment, especially in Asia. The figures for China are positive," said Marijke Zewuster, Head EM research, ABN AMRO.

"If you look at the underlying figures they are relatively strong at the moment."

The U.S. dollar - which dropped sharply on Tuesday after the collapse of a healthcare bill dealt a blow to President Donald Trump's ability to deliver promised fiscal reforms - could muster little more than tentative gains on Wednesday.

Against a basket of other major currencies, it was up 0.2 percent at 94.782, but still down around 7 percent on the year and within sight of Tuesday's low of 94.476.

Analysts said the slight gains in the dollar were down to expectations the European Central Bank and the Bank of Japan may strike dovish tones when they meet on Thursday, which could dent recent strength in the euro and the Japanese Yen.

The ECB is expected to adjust its language, but substantive changes to policy will likely come later in the year. The BOJ is expected to raise its growth forecast but cut its inflation outlook.

The euro inched down against the dollar, having made a 14-month top on Tuesday.

The diminished prospect of fiscal spending in the U.S. has been a boon to bonds, especially as a run of soft U.S. inflation readings had lessened the risk that the Federal Reserve would need to be aggressive in removing its stimulus.

Yields were broadly lower across the euro zone for a second straight day on Wednesday, with U.S. Treasury yields trading near three-week lows.

"The question marks over U.S. reform on the one hand, and the underlying economic growth momentum on the other hand are likely to keep the U.S. within its current goldilocks scenario for longer," analysts at Morgan Stanley (Xetra: 885836 - news) said in a note.

"Globally, financial conditions tend to improve when the dollar is weak and vice versa," they added.

ASIAN GAINS

European stocks made decent gains supported by a slew of upbeat earnings from firms and Wall Street was set to open a touch higher. But the most eye-catching stock moves were in Asia.

Those gains come on the back of data this week which showed China's economy expanding at a faster-than-expected 6.9 percent clip in the second quarter, setting the country on course to comfortably meet its 2017 growth target.

MSCI's index of Asia-Pacific shares ex Japan and its index of emerging market shares were both up 0.6 percent at their highest since April 2015.

Shanghai's blue-chip CSI300 index rose 1 percent and back toward an 18-month peak, while Australia's main index added 0.9 percent. The strength of the yen limited Japan's Nikkei to a rise of 0.1 percent.

For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Opener=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets

Bank of America Merrill Lynch said it was reverting to a bullish position on Asian and emerging market equities, having been "tactically neutral" since late February.

It said more resilient growth estimates and an assumption that inflation is unlikely to rise was behind the decision, picking out China, Korea and Taiwan (Taiwan OTC: 6549.TWO - news) as buying opportunities.

Oil prices traded a touch higher, adding to gains seen on Tuesday as the dollar slipped. (Additional reporting by Claire Milhench in London and Wayne Cole in Sydney; editing by Alexander Smith)