* Oil gives up gains as investors take profit on Iran rally
* U.S. bond yields fall on soft CPI data for April
* Dollar slips after U.S. CPI misses economist forecasts
By Herbert Lash
NEW YORK, May 10 (Reuters) - The U.S. dollar slid and U.S. government debt yields fell on Thursday as a modest rise in consumer prices in April damped expectations that faster inflation could lead the Federal Reserve to boost interest rates more than expected in 2018.
The U.S. Labor Department said its Consumer Price Index rose 0.2 percent last month, less than forecasts for 0.3 percent, as a moderation in healthcare prices offset increases in the cost of gasoline and rental accommodations. L1N1SG1UT
The dollar fell against the euro, the Japanese yen and a basket of other major currencies, while the Mexican peso MXN= and Brazilian real BRL= jumped about 1 percent on the news.
Benchmark 10-year U.S. Treasury notes US10YT=RR rose 8/32 in price to push yields down to 2.964 percent after breaching 3 percent on Wednesday.
"Inflation is going to rise in year-over-year terms over the summer, but the rise remains moderate rather than sharp," said Eric Winograd, senior economist at AllianceBernstein LP.
The soft read on inflation should give the Fed comfort that their gradual approach to raising rates is the correct one and ease market concerns, he said.
"I view today's number as a slight positive for risk assets in the near term," Winograd said.
MSCI's broad gauge of global equity markets .MIWD00000PUS rose 0.51 percent and turned positive for the year as it hit three-weeks highs.
Chinese internet giant Tencent 0700.HK , Apple AAPL.O , Microsoft MSFT.O and Facebook FB.O led the index's advance, while the U.S. technology sector lifted Wall Street.
Emerging market stocks .MSCIEF rose 1.26 percent, while Asia-Pacific shares outside Japan and the Nikkei .N225 in Tokyo both earlier closed higher.
The pan-European FTSEurofirst 300 index .FTEU3 of leading regional shares fell 0.25 percent, but shares in London .FTSE , Germany .GDAXI and France .CAC40 were higher.
On Wall Street, the Dow Jones Industrial Average .DJI rose 154.43 points, or 0.63 percent, to 24,696.97. The S&P 500 .SPX gained 15.07 points, or 0.56 percent, to 2,712.86 and the Nasdaq Composite .IXIC added 45.80 points, or 0.62 percent, to 7,385.70.
Oil prices were in flux and gave up earlier gains as investors took profit on a rally triggered by the potential disruption to crude flows from major exporter Iran in the face of U.S. sanctions.
The United States said on Tuesday it plans to impose new sanctions against Iran after abandoning an agreement reached in late 2015 that curbed Tehran's nuclear activities in exchange for removal of U.S. and European sanctions. crude futures LCOc1 were down 0.08 percent at $77.13 a barrel, after hitting $78 earlier in the day, their highest since November 2014.
U.S. West Texas Intermediate CLc1 crude futures were last up just 0.04 percent at $71.18. O/R