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• Equities climb on Fed's bullish and supportive view
• Fed sees 2021 GDP growth of 6.5%, unemployment at 4.5%
• Fed says will keep rates low through 2023
• Bonds sell off, though, with 10-year Treasury yields near 1.75%

LONDON, March 18 (Reuters) - World share markets edged higher on Thursday after the U.S. Federal Reserve promised to keep its support in place, though another rise in global bond yields and the dollar showed not everyone was convinced.

MSCI's 50-country world index was near record highs after the Fed, which had also predicted bumper U.S. growth, had lifted Wall Street and Asia overnight , and Europe opened with Germany's DAX at a record high.

For traders worried about it all being snuffed out by rising borrowing costs, though, euro zone government bond yields were already tracking upward moves in benchmark 10-year U.S. Treasuries as they climbed to a 13-month high of 1.74%.

That also revitalised the dollar, which had briefly dropped to a two-week low after the Fed had pushed back against speculation it could be starting to think about interest rate hikes.

The U.S. central bank sees the economy growing 6.5% this year, which would be the largest jump since 1984. Inflation is expected to exceed its preferred level of 2% to 2.4%, although it is expected to drop back in subsequent years.

"I don't know what the Fed can do to stop a rise in yields that is based on stronger fundamentals," said BCA chief global fixed income strategist Rob Robis, pointing to the $1.9 trillion U.S. stimulus package that will drive growth.

"The path of least resistance is still towards higher yields," he said. "The U.S. Treasury market leads the world and every bond market responds."

Another day of central bank action was in store too.

The Bank of Japan and Bank of England are both meeting, Norway signalled a possible hike this year and in emerging markets Turkey's central bank was facing a crucial test of confidence after a torrid month for the lira.

The dollar index, which measures the greenback against a basket of its peers, rose as much as 0.4% to 91.671. It had dropped to 91.300 after Wednesday's Fed meeting.

That eased the euro back to $1.19505 from a one-week high of $1.19900. Against the yen, the dollar gained 0.3% to 109.120 yen .

The British pound traded flat at $1.3963. The Bank of England is expected to keep its benchmark Bank Rate at a historic low of 0.1% and its bond-buying programme unchanged at 895 billion pounds.

"Similar to what we've seen from the Fed, the Bank of England will talk up their prospects of the economy relative to where we've been, but at the same time emphasize that we're still a long way from full recovery," said Rodrigo Catril, senior currency strategist at National Australia Bank in Sydney.

The Australian dollar rose to a two-week high of $0.7849

after data showed the nation's economy created more than twice as many jobs as expected in February. . Its New Zealand counterpart lost momentum, however, after the country posted a surprise contraction in fourth-quarter GDP.

INFLATION PALPITATIONS

Overnight, Asia-Pacific shares excluding those in Japan rose 0.8%. Stocks in China rose the same. Australia fell 0.7%.

Wall Street futures were also pointing lower, with S&P 500 futures down 0.4% and Nasdaq futures down over 1% , amid the pressure higher U.S. rates tend to put on tech firms with stratospheric valuations.

While inflation is expected to reach 2.4% this year, Fed Chair Jerome Powell called it a "temporary" surge that will not change the Fed's pledge to keep its benchmark overnight interest rate near zero.

With long-term Treasury yields climbing again though in Europe, the yield curve was steepening. The spread between two-year and 10-year U.S. yields , the most-keenly monitored part of the yield curve, rose to 155 basis points, the steepest since September 2015.

The 10-year inflation break-even rate hit 2.3%, indicating inflation expectations are now at their highest since January 2014.

The reaction in commodity markets was a small dip in Brent oil prices to $67.6 a barrel. Traders also pointed to rising U.S. crude inventories and expectations of weaker demand in Europe, where the coronavirus vaccine roll out is faltering.

Gold dipped 0.3% to $1,737 per ounce.