NEW YORK (Reuters) - Major world equity markets rallied and government bond yields fell on Tuesday as strong corporate profits, steady global growth and low inflation provide scant alternatives for investors outside of stocks.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., November 20, 2017. REUTERS/Brendan McDermid

Equity markets from Asia to Europe to the Americas rose, while the S&P 500 and Nasdaq surged to fresh closing highs, lifted by technology shares. The Dow set a new intra-day high.

In Asia, the main Hang Seng index .HSI in Hong Kong and China's H-shares index .HSCE posted their best day in seven weeks, while stocks in Tokyo .N225 also rose.

In Europe, Germany's benchmark DAX index .GDAXI jumped more than 1 percent before paring gains. MSCI's emerging markets index .MSCIEF rose 1.44 percent and its gauge of stocks across the globe .MIWD00000PUS gained 0.71 percent.

“It’s incredible,” said Jack Ablin, chief investment officer at BMO Private Bank in Chicago. “Certainly sentiment is pretty strong and it’s widespread, both from the business community and consumers. Any economic concerns are pretty much falling by the wayside,” he said.

Corporate earnings and expanding growth have propelled the stock rally while investors shrug off political risk. Wall Street trading volumes were low in a week marked by the U.S. Thanksgiving holiday.

The Dow Jones Industrial Average .DJI rose 160.5 points, or 0.69 percent, to 23,590.83. The S&P 500 .SPX gained 16.89 points, or 0.65 percent, to 2,599.03 and the Nasdaq Composite .IXIC added 71.76 points, or 1.06 percent, to 6,862.48.

Earlier in Europe, Volkswagen VOWG_p.DE was among Germany's top gainers for a second day, closing up 3.0 percent, after the carmaker raised its mid-term outlook on Monday.

The pan-European FTSEurofirst 300 index .FTEU3 closed up 0.45 percent.

Chipmaker Analog Devices Inc's ADI.O quarterly profit beat analysts' estimates on growth in its industrial segment and automotive business, which has seen sharp demand for sensor chips from electric and self-driving vehicles.

Goldman Sachs raised its earnings estimate for the S&P 500 in 2018 and 2019 based on expectations of U.S. corporate tax reform, above-trend global and U.S. growth and slowly rising interest rates from an historically low base.

Investors are not worried about an unwelcome surprise acceleration of U.S. inflation that could rock a Goldilocks scenario where growth supports earnings and central banks are unlikely to act in a heavy-handed fashion, said Larry Hatheway, chief economist at GAM Investment Management in Zurich.

“There isn’t right now in an investor’s mind a compelling alternative to holding stocks,” Hatheway said.

“We’ve generally seen stable-to-lower bond yields, so underneath it there does seem to be a very strong faith fundamentally that growth is fine, therefore earnings are fine but inflation is not a risk,” he said.

The gap between French and German borrowing costs narrowed to its tightest since before the 2010-2012 euro zone debt crisis, as confidence in the bloc’s economic prospects swelled.

The spread on 10-year French and German debt FR10YT=TWEBDE10YT=TWEB tightened to 15 basis points, a level last seen in August 2009, well before several sovereign debt crises rocked the single currency bloc and global markets.

In the United States, the Treasury yield curve flattened to its lowest in a decade as investors awaited minutes from the Federal Reserve’s last meeting, to be released on Wednesday.

Low inflation and global demand for yield has supported longer-dated debt. Benchmark 10-year notes US10T=RR were last up 3/32 in price to yield 2.3595 percent.

The dollar turned broadly lower, moving in line with declining U.S. 10-year Treasury yields.

The dollar index .DXY fell 0.12 percent, with the euro EUR= up 0.05 percent to $1.1738. The Japanese yen strengthened 0.16 percent versus the greenback at 112.46 per dollar JPY=.

Oil rose, supported by expectations of an extension next week of output cuts by the Organization of the Petroleum Exporting Countries, but prices remained under pressure from signs of higher output in the United States.

Brent crude oil LCOc1 rose 35 cents to settle at $62.57 a barrel. U.S. light crude CLc1 added 41 cents to settle at $56.83.

U.S. gold futures GCcv1 for December delivery settled up $6.40 at $1,281.70 per ounce.