GLOBAL MARKETS-Stocks, sterling rally on stimulus hopes

* Risk-on mood across markets, European stocks up 1 pct

* Wall St set to open at record high

* Sterling strengthens as UK political uncertainty eases

* Italian banks rally on hopes of deal on bad loans

* Oil rallies, gold slips (Adds S&P futures)

By Vikram Subhedar

LONDON, July 12 (Reuters) - European shares were on track for a fourth straight day of gains and the yen broke below its post-Brexit low on Tuesday as easing political tensions in Britain, stimulus hopes and a record high close for U.S (Other OTC: UBGXF - news) . stocks boosted risk appetite.

S&P 500 index futures , up 0.5 percent, pointed to further gains on Wall Street on Tuesday.

Europe's STOXX 600 rose 1 percent, helped by strong gains in Daimler (LSE: 0NXX.L - news) and Unicredit (EUREX: DE000A163206.EX - news) , while sterling jumped 1.3 percent against the dollar, pulling further away from a 31-year low hit last week.

In Britain, interior minister Theresa May was set to become prime minister on Wednesday, offering some relief from the political uncertainty that has dogged the market since the country voted to leave the European Union last month.

Second-quarter earnings season, for which investor expectations are low, got off to a bright start in the U.S. with aluminum producer Alcoa (NYSE: AA - news) beating estimates overnight.

In Europe, shares in Daimler jumped 5 percent after the German automaker posted encouraging results and reiterated its full-year outlook, allaying some concerns about the impact of Brexit.

Italian banks, a focus of investor concerns in Europe, got a boost on Tuesday with Unicredit jumping nearly 7 percent after the bank took steps to strengthen its capital position by selling a stake an online broker.

Italian government borrowing costs edged lower on Tuesday, narrowing the gap with benchmark Germany, as Rome moved closer to a deal to safeguard the country's struggling banks.

"If there is some way in which Italy's banks can offload their inventory of bad loans then that would be seen as very positive for the economy and, in turn, allow government spreads to tighten further," Mizuho strategist Peter Chatwell said.

RISK APPETITE RETURNS

Earlier, Asian shares extended gains, partly on expectations of more policy stimulus, particularly in Japan.

Japanese Prime Minister Shinzo Abe signalled a fresh round of fiscal stimulus after a victory for his ruling coalition in upper house elections, sending the yen lower and stocks higher.

Traders in London said former U.S. Federal Reserve chief Ben Bernanke's presence in Tokyo had boosted expectations of more monetary easing too. The BOJ is still far from achieving its inflation target despite adopting negative rates earlier this year in addition to its asset buying programme.

"The market is now priced for more than 10 trillion yen (of extra stimulus), but it will be more about the fiscal-monetary coordination that is driving markets," said Hans Redeker, head of currency strategy at Morgan Stanley (Xetra: 885836 - news) , suggesting that figure would rise in light of Abe's comments.

The dollar rose 1 percent to 103.92 yen, its highest level since June 24, when the British referendum result roiled global markets. The euro jumped more than 1 percent to 115 yen .

In commodities, oil prices recovered from two-month lows as a brief halt in Iraqi crude loadings threatened to tighten supplies.

Brent crude was at $47.72 per barrel, up more than 3 percent from its last close. U.S. West Texas Intermediate crude was up $1.30 at $46.05 a barrel.

Prices of basic metals including zinc, aluminum and nickel got a boost after Goldman Sachs (NYSE: GS-PB - news) lifted its forecasts on expectations of tighter supplies in the second half of the year. (Reporting by Vikram Subhedar, additional reporting by Anirban Nag and John Geddie; editing by John Stonestreet)