(Updates at 0915 GMT)

By Stella Qiu and Alun John

LONDON/SYDNEY, May 28 (Reuters) - World shares held near

all-time highs on Tuesday and U.S. Treasury yields ticked lower

as investors awaited inflation data from both sides of the

Atlantic due later in the week.

Traders were keeping an eye on the shift to a shorter

settlement in U.S. trading but there were few major moves in

advance to the U.S. market open.

Investors in U.S. equities, and other securities, must

settle their transactions one business day after the trade

instead of two from Tuesday.

Most asset classes, outside commodities, have been trading

in fairly narrow ranges in recent weeks, with major share

benchmarks near record-highs, European bond yields inching

higher and the dollar gradually trending weaker against major

peers.

U.S. PCE inflation and CPI inflation data from major euro

zone economies this week are the main things that could jolt

markets out of their current thinking by affecting expectations

of when major central banks will start cutting rates. Inflation

data in the euro zone is released from Wednesday, followed by

the PCE on Friday.

"If you want big moves you've got to put back the thought

that the next U.S. move is a hike into the market's mind," said

Kit Juckes, chief FX strategist at Societe Generale.

While he was referring to the dollar, there is a lot of

correlation between assets at the moment.

"We were there at the end of the first quarter when we were

bombarded by stronger-than-expected -U.S. numbers, but that's

all sort of melted away and we're in kind of no man's land,"

Juckes said.

Markets are currently fully pricing one 25 basis-point Fed

rate cut this year, most likely in September or November. They

see a one-third chance of a second 25 bps cut by year-end.

In the euro zone, it is all but certain the European Central

Bank will cut rates at its meeting next month, though markets

are only betting on one further cut by December.

Of interest for policymakers, euro zone consumers lowered

their inflation expectations last month, a fresh ECB survey

showed on Tuesday.

MSCI's world share index was flat on the

day, as was Europe's broad STOXX 600, both near to

record-highs hit this month. Asian shares had traded broadly

steady earlier in the day, and U.S. S&P 500

futures are up 0.3%.

Emerging markets were also in focus, with Zambia likely to

emerge from a lengthy default after the country's finance

ministry said more than 90% of holders of its $3 billion in

outstanding international bonds had accepted its restructuring

proposal so far.

WATCHING JAPAN

Elsewhere, data on Tuesday showed the Bank of Japan's key

measurements of underlying inflation all fell in April below its

2% target for the first time since August 2022, heightening

uncertainty on the timing of the central bank's next interest

rate hike.

But investors appeared more focused on comments made on

Monday by BOJ Deputy Governor Shinichi Uchida, who said that the

end of Japan's battle against persistent deflation was in sight.

Ten-year Japanese government bond yields rose to 1.035% on

Tuesday - its highest since April 2012.

That kept the yen in check at 156.95 per dollar, flat on the

day, though the Japanese currency softened to its weakest in

many years against the pound and Australian dollar.

By European trading most FX pairs were little moved, with

the euro flat at $1.0868.

The cash Treasury market returned from a holiday with prices

recovering marginally after taking a hit last week.

Two-year yields fell 2 basis points to 4.927%,

having surged 13 bps the previous week, while the 10-year yield

dipped a similar amount to 4.453%, after rising 5

bps the week before.

Oil prices extended gains from the previous session. Brent

futures inched up to $83.16 a barrel. U.S. crude futures

for July were at $78.92 a barrel, up 1.4% from Friday's

close, after Monday's U.S. holiday.

Spot gold was down 0.2% at $2343.3 an ounce.