GLOBAL MARKETS-World stocks head for record 12th month of gains

* World share index set for record 12th month of gains

* European stocks nudge to 5 1/2-month high

* MSCI Asia-Pacific index up 0.4 pct, Nikkei flat

* South Korea shares boosted by thaw in Seoul-Beijing standoff

* China Oct factory growth slows more than forecast

* Dollar sags after Trump's ex-campaign manager indicted

* Brent crude hovers near two-year highs

* Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh

By Marc Jones

LONDON, Oct (Shenzhen: 000069.SZ - news) 31 (Reuters) - World stocks headed for a record twelfth month of gains on Tuesday, as a 5 1/2-month high in European stocks and records elsewhere underscored one of the most robust bull markets on record.

Europe's latest rally came as figures from the once-fragile euro zone showed its growth now running at 2.5 percent year-on-year and unemployment at its lowest since early 2009 at under 9 percent.

It helped Europe's main bourses extend modest early gains ahead of what was expected to be a higher start for Wall Street and Asia had mostly risen despite some disappointing industrial data from China.

Focus also remained on the dollar which was set for its biggest monthly rise since February, having been knocked back slightly on Monday by fresh political unease.

Federal investigators probing Russian interference in the 2016 U.S. election charged President Donald Trump's former campaign manager, Paul Manafort, and another aide, Rick Gates, with money laundering.

"There does seem to be very little alterative to riding the risk wave in the markets," said asset manager GAM's group head of multi-asset portfolios Larry Hatheway.

"The question clients are asking and we are asking ourselves, is how long are we supposed to stay in this (rally)."

The upbeat euro zone data nudged up euro zone bond yields slightly.

Italy's borrowing costs however were set to end October with their biggest monthly drop in more than two years after a surprise ratings upgrade, the extension of the ECB's bond buying programme and the approval of a new electoral system.

Italy's benchmark 10-year bond yield had fallen to its lowest level in around 10 months before the data at 1.837 percent. It is down over 30 basis points this month, which is the biggest move since July 2015.

Company earnings updates also added some spice.

Shares (Berlin: DI6.BE - news) in heavyweight oil major BP jumped more than 3 percent to their highest since July 2014, after third quarter profits beat expectations and it announced a share buyback programme.

Ryanair, hurt recently by cancelled flights, climbed more than 5 percent after it maintained its full-year profit guidance, though BNP Paribas (LSE: 0HB5.L - news) sank 3 percent after its results disappointed.

So far, more than 40 percent of MSCI Europe companies have reported results for the third quarter, of which 65 percent have either met or beaten expectations, according to Thomson Reuters (Dusseldorf: TOC.DU - news) I/B/E/S data.

Financials and tech are sectors standing out for their large proportion of beats.

RECORD RUN

The year-long global surge in stocks, driven by the pick-up in growth, corporate profits and still ultra-low interest rates, was set to see MSCI (Frankfurt: 3HM.F - news) 's 47-country 'All World' index top the 2003 run of 11 straight months of gains.

Wall Street was expected to start fractionally higher following a dip from the last round of record highs on Monday .

MSCI's index of Asia-Pacific shares outside Japan had ended up 0.4 percent, as strong gains in South Korea and Taiwan (Taiwan OTC: 6549.TWO - news) , which make up roughly a quarter of the index's weighting, offset weakness in China and Hong Kong.

Chinese data had shown a sharper-than-expected slowdown in October factory growth.

Beijing's war on winter air pollution is forcing many northern steel mills, smelters and factories to curtail production, adding to uncertainty amid early signs of a slowdown in the world's second-largest economy.

South Korea's KOSPI ended up 1 percent at a record high after Seoul and Beijing agreed to normalise relations that have been strained by a year-long standoff over the deployment of a U.S. anti-missile system in South Korea.

"Shares that have long been pressured by ongoing political disputes between the two countries are reacting positively to the announcement, including Hyundai Motor-related stocks," said Cho Byung-hyun, a stock analyst at Yuanta Securities (Taiwan: 0060.TW - news) .

Tech-heavy Taiwan added 0.4 percent after Apple (Swiss: AAPL-EUR.SW - news) made big gains overnight on hopes of strong demand for its new range of iPhones.

Japan's Nikkei closed flat, capped by the overnight weakness in U.S. shares and a stronger yen. The Bank of Japan meanwhile stressed it saw no reason to end its mass stimulus programme.

The dollar's rebound ahead of U.S. trading pulled it off a 10-day low of 113.02 yen struck after details of charges for former Trump aides were disclosed. It was last at 113.32 yen.

The euro was softer at $1.1637. It had pulled back overnight from a three-month low of $1.1574 on Friday.

Among commodities, crude oil prices steadied below their recent peaks after being boosted by expectations OPEC-led production cuts would be extended beyond March.

Brent crude futures were down 0.1 percent at $60.80 a barrel after rising to $61 overnight, the highest since July 2015.

U.S. crude was 0.15 percent lower at $54.10 after touching $54.46, its highest since late February.

Spot gold was also a fraction lower at $1,274 per ounce. It has shed about 0.3 percent so far in October, in what could be its second straight monthly decline.

(Additional reporting Shinichi Saoshiro in Tokyo; Editing by Peter Graff)