(Adds U.S. markets close)

* U.S. consumer spending increases, rise in inflation slows

* Wall Street rallies, snaps weekly losing streak

* Treasury yields fall

* Brent oil rises $2

NEW YORK, May 27 (Reuters) - Global markets enjoyed a broad-based rally on Friday, while the yield on benchmark U.S. Treasuries fell after data showed that U.S. consumer spending rose in April and the uptick in inflation slowed, two signs the world's largest economy could be on track to grow this quarter.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.9% last month, and although inflation continued to increase in April, it was less than in recent months. The personal consumption expenditures (PCE) price index rose 0.2%, the smallest gain since November 2020.

Wall Street rallied on Friday after the data, with all three major U.S. stock indexes bringing a decisive end to their longest weekly losing streaks in decades.

The U.S. Federal Reserve, in minutes from its May meeting released earlier this week, called inflation a serious concern. A majority of the central bankers backed two half-a-percentage- point rate hikes in June and July, as the group attempts to curb inflation without causing a recession.

The Fed did leave room for a pause in hikes if the economy weakens.

Analysts said the consumer spending and inflation data was encouraging and supported growth estimates for the second quarter that are mostly above a 2.0 annualized rate.

"The growth engine of the U.S. economy is still alive and kicking, and that's important," said Joe Quinlan, head of CIO Market Strategy for Merrill and Bank of America Private Bank. "Growth estimates for (the second quarter) are still good. There is a better tone in the market than we have seen in recent weeks, in terms of inflation possibly peaking here. Maybe we can avoid stagflation."

The MSCI world equity index, which tracks shares in 45 nations, was up 2.12% at 4:45 p.m. EDT (2045 GMT).

Global equity funds saw inflows in the week to May 25 for the first week in seven weeks, according to Refinitiv Lipper.

European shares hit a three-week high and rose 1.42%. Britain's FTSE also hit a three-week high, and was heading for its best weekly showing since mid-March.

The Dow Jones Industrial Average rose 575.77 points, or 1.76%, to 33,212.96, the S&P 500 gained 100.4 points, or 2.47%, to 4,158.24 and the Nasdaq Composite <.IXIC added 390.48 points, or 3.33%, to 12,131.13.

The yield on benchmark 10-year Treasury notes was last 2.7432%. It had hit a three-year high of 3.2030% earlier this month on fears that the Fed may have to raise rates rapidly to bring inflation under control.

Lower yields show the Fed's monetary policy is succeeding in tightening credit and slowing down prices, said BofA's Quinlan.

"The 10-year yield is suggesting we don't have to have inflation break above 9-10%," Quinlan said. "We are getting close to a peak in inflation."

The two-year yield, which rises with traders' expectations of higher fed fund rates, fell to 2.4839%.

German 10-year bond yields fell 4 bps to 0.955%.

Asian shares also benefited from hopes of stabilizing Sino-U.S. ties and more Chinese government stimulus.

The United States would not block China from expanding its economy, but wanted it to adhere to international rules, Secretary of State Antony Blinken said on Thursday in remarks that some investors interpreted as positive for bilateral ties.

Emerging market stocks rose 1.98%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 2.17% higher, while Japan's Nikkei rose 0.66%.

The swing toward broadly positive market sentiment drove the dollar to one-month lows against an index of currencies.

The dollar index fell 0.059%, with the euro up 0.06% at $1.073.

Oil prices were near two-month highs on the prospect of a tight market due to rising gasoline consumption in the United States in summer, and also the possibility of an EU ban on Russian oil.

U.S. crude settled 98 cents higher, or up 0.86%, at $115.07 a barrel. Brent settled $2.03 higher, or up 1.73%, at $119.43 a barrel.

Spot gold added 0.2% to $1,852.83 an ounce.

(Reporting by Elizabeth Dilts Marshall in New York Additional reporting by Chuck Mikolajczak in New York, Carolyn Cohn in London, Stella Qiu in Beijing and Kevin Buckland in Tokyo; Editing by Chizu Nomiyama, Alistair Bell and Matthew Lewis)