GLOBAL MARKETS-World shares gain; U.S. yield curve flattest in decade

* Wall St up as investors await tax bill details

* H&M leads European shares lower after sales miss

* Dollar index firmer on tax bill optimism (Updates to Europe close, adds commentary)

By Stephanie Kelly

NEW YORK, Dec (Shanghai: 600875.SS - news) 15 (Reuters) - World shares gained on Friday and Wall Street opened higher on U.S. tax legislation optimism, while the U.S. yield curve hit its flattest in a decade after the Federal Reserve hiked interest rates earlier this week.

MSCI (Frankfurt: 3HM.F - news) 's gauge of stocks across the globe gained 0.35 percent after a week of central bank meetings that saw the U.S. Federal Reserve raise interest rates yet left its rate outlook for the coming years unchanged. The European Central Bank and the Bank of England held off on hikes.

The Dow Jones Industrial Average rose 162.25 points, or 0.66 percent, to 24,670.91, the S&P 500 gained 26.08 points, or 0.98 percent, to 2,678.09 and the Nasdaq Composite added 82.80 points, or 1.21 percent, to 6,939.32.

Wall Street equities sharply rose as U.S. Republican lawmakers are to reveal details of the final Republican tax bill later on Friday. Votes on the legislation from both the House of Representatives and the Senate are expected next week.

"People still think the tax bill will get done. I don't think Republicans are going to let this by the wayside as they've come this far," said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Company in Wisconsin.

The bill has been one of the catalysts for this year's surge in the stock markets.

Europe's STOXX 600 closed down 0.19 percent, as a 12.98 percent slump in fashion giant H&M and a 6.29 percent drop for Italian luxury goods firm Ferragamo spooked retailers.

In addition, worries over political risk spurred profit-taking. According to EPROM's weekly data, worries over the national election next year in Italy hit European equity funds with outflows at their highest level in over a year.

Emerging market stocks lost 0.19 percent. MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.45 percent.

Japan's Nikkei stock index finished down 0.6 percent at its lowest in more than a week, with mobile firms extending a selloff on concerns of increased competition after e-commerce group Rakuten (Frankfurt: 927128 - news) said it aims to become the country's fourth wireless carrier.

U.S. YIELD CURVE HITS FLATTEST IN DECADE

The margin between U.S. shorter-dated and longer-dated Treasury yields contracted to its slimmest in a decade on Friday after the Fed earlier this week upgraded U.S. growth forecasts but left its inflation view unchanged.

"That sparked the extra kicker for curve flatteners the last couple of days," said Thomas Roth, head of U.S. Treasury trading at MUFG Securities Americas in New York. "People are very comfortable with holding long-dated paper."

The yield spread between five-year and 30-year Treasuries was last at 53.2 basis points.

The U.S. dollar strengthened as Republican negotiators put the finishing touches on the tax overhaul bill and expectations rose that the bill would pass by year-end.

The greenback rose and fell throughout the week after news surrounding the central bank policy meetings and tax reform.

News that the European Union had formally agreed to move Brexit talks onto trade and a transition pact triggered a 0.83 percent drop in the pound, as traders cashed in recent gains.

The euro was down 0.2 percent to $1.1754.

In commodity markets, U.S. crude rose 0.46 percent to $57.30 per barrel and Brent was last at $63.22, down 0.14 percent on the day.

Spot gold added 0.2 percent to $1,255.30 an ounce. U.S. gold futures gained 0.09 percent to $1,258.20 an ounce.

(Reporting by Stephanie Kelly; Additional reporting Danilo Masoni in Milan, Julien Ponthus in London, Karen Brettell and Richard Leong in New York, Rama Venkat Raman and Sruthi Shankar in Bengaluru; Editing by Nick Zieminski)