* Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh
* MSCI ACWI hits highest since March 13
* Dollar slips as trade worries ebb
* Oil prices edge higher
By Herbert Lash
NEW YORK, Sept 21 (Reuters) - The U.S. dollar rebounded and world shares hit a more than six-month high on Friday after China's moves to boost domestic consumption bolstered a rally driven by investor bets the latest U.S.-Sino trade salvoes were unlikely to dent global growth.
The U.S. benchmark S&P 500 stock index and the Dow industrials scaled record peaks for a second session, though the Nasdaq turned lower soon after the market opened.
MSCI's gauge of stocks across the globe .MIWD00000PUS gained 0.39 percent to hit six-month highs.
Sterling tumbled and pushed the dollar up after British Prime Minister Theresa May said Brexit talks had hit an impasse and that the European Union must offer an alternative plan after the bloc's leaders rejected her plans. pound GBP= fell 1.36 percent, and was on course for its biggest daily loss since June 2017.
"Sterling bears are out in full force. They've pushed the pound quite aggressively down this morning," said Dean Popplewell, a chief currency strategist at Oanda in Toronto.
The dollar rebounded from early lows but was still set for its biggest weekly drop since February as the equity market rally and rising bond yields fueled a rush to buy riskier assets. The dollar index rose 0.26 percent .DXY to 94.159 against a basket of major currencies.
A rally in Chinese markets helped lift MSCI's broadest index .MIAPJ0000PUS of Asia-Pacific shares outside Japan 1.32 percent, partly on expectations that Beijing will pump more money into its economy to weather the trade war. and banks drove Britain's top share index .FTSE up 1.6 percent, while Germany's DAX .GDAXI , home to some of the continent's biggest exporters, rose 0.53 percent.
U.S. capital markets are exuberant, with stock valuations high at 21 times trailing earnings and struggling economies around the world a risk for U.S. stocks, said Michael Geraghty, equity strategist at Cornerstone Capital Group in New York.
"There's really been no bad news to cause this market to take a breather for weeks," Geraghty said. "The risk for U.S. equity markets is what's going on overseas."
The Dow Jones Industrial Average .DJI rose 48.39 points, or 0.18 percent, to 26,705.37. he S&P 500 .SPX gained 2.73 points, or 0.09 percent, to 2,933.48 and the Nasdaq Composite .IXIC dropped 21.76 points, or 0.27 percent, to 8,006.47.
Shares of Boeing (NYSE:BA) BA.N and 3M (NYSE:MMM) MMM.N , among U.S. companies most exposed to a trade war, were higher. However, semiconductor makers declined after top chipmaker Micron MU.O said U.S. tariffs on Chinese goods would weigh on results for as much as a year. long-dated Treasury yields slipped, in tandem with those in Europe, as Brexit talks stalled between Britain and the European Union.
U.S. 2-year yields, however, remained unaffected as they hit a fresh 10-year high in the run-up to an expected rate increase at next week's Federal Reserve monetary policy meeting.
Benchmark 10-year notes US10YT=RR last rose 3/32 in price to yield 3.0683 percent.
Oil prices rose ahead of a meeting of the Organization of Petroleum Exporting Countries and other large crude exporters on Sunday that will focus on production increases as U.S. sanctions restrict exports from Iran.
Brent crude oil LCOc1 rose 2 cents at $78.72 a barrel. U.S. light crude CLc1 gained 21 cents at $70.53.
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