* U.S. 10-yr yield hits 13-month high * Gold little changed, bitcoin dips * Crude slips after two strong weekly gains (Updates prices, comments) NEW YORK, March 12 (Reuters) - An index of stocks across the world fell on Friday but was set to post its strongest weekly gain in five, while benchmark Treasury yields climbed to 13-month highs, partly on optimism after a $1.9 trillion recovery package was signed into law. Gains in Shanghai and Tokyo stock markets proved tough to match in Europe and on Wall Street, where banks were the silver lining and the Nasdaq underperformed as the rotation from growth to value continued. The Dow Industrials hit a record high. The spike in Treasury yields gave support to the dollar while the sell-off in stocks shone a light on the greenback’s safe haven appeal. Against a backdrop of super-loose monetary policy, some analysts expect inflation to pick up as vaccine rollouts lead to economies reopening, leading to worries that the stimulus package could overheat the American economy. U.S. President Joe Biden signed the stimulus legislation before giving a televised address on Thursday night in which he pledged aggressive action to speed vaccinations and move the country closer to normality by July 4. “We are back to the idea that more growth is more inflation and investors are a little nervous about current yield levels which is affecting tech stocks,” said Victoria Fernandez, chief market strategist at Crossmark Global Investments in Houston. “It’s all about the pace in which yields grow and the market seems to be comfortable with another 10-20 basis points jump in the benchmark yield if backed up by strong data that shows economic recovery.” The Dow Jones Industrial Average rose 233.39 points, or 0.72%, to 32,718.98, the S&P 500 lost 3.36 points, or 0.09%, to 3,935.98 and the Nasdaq Composite dropped 111.26 points, or 0.83%, to 13,287.42. The pan-European STOXX 600 index lost 0.26% and MSCI’s gauge of stocks across the globe shed 0.17%. Emerging market stocks lost 0.76%. Overnight, MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.69% lower, while Japan’s Nikkei rose 1.73%. U.S. 10-year Treasury yields rose above 1.6% and were on track to post their seventh consecutive weekly rise. “The bias in rates is still higher barring an unforeseen setback on the vaccines or explicit Fed action,” said Gregory Faranello, head of U.S. rates at AmeriVet Securities in New York. U.S. producer prices posted in February their largest annual gain in nearly 2-1/2 years, but still high unemployment could make it harder for businesses to pass on the higher costs to consumers. Benchmark 10-year notes last fell 30/32 in price to yield 1.6317%, from 1.527% late on Thursday. The recent, sharp, market moves give even more importance to next week’s meeting of the U.S. Federal Reserve for clues to its views on rising yields and the threat of inflation. In currency markets, the dollar index rose 0.244%, with the euro down 0.28% to $1.1951. The Japanese yen weakened 0.51% versus the greenback at 109.04 per dollar, while Sterling was last trading at $1.3923, down 0.48% on the day. Markets are likely to remain volatile in the second quarter, particularly for the dollar, which was much stronger than expected at the start of the year, said Cliff Zhao, chief strategist at China Construction Bank International. “The strong U.S. dollar may weigh on some liquidity conditions in the emerging markets,” he said. The Institute of International Finance on Thursday urged the Fed to give guidance on its managing of higher yields to avoid even more outflows from emerging markets. Oil prices fell, with both Brent and WTI struggling to keep the weekly performance in positive territory after rising more than 10% over the past two weeks. On Friday, U.S. crude fell 0.53% to $65.67 per barrel and Brent was at $69.22, down 0.59% on the day. Spot gold added 0.1% to $1,722.56 an ounce. Silver fell 0.79% to $25.87. Bitcoin last fell 1.43% to $56,947.33.