* MSCI World Index up 1.2%; STOXX Europe 600 up 1% * Wall St extends recovery at the end of volatile week * Fed Governor Waller signals policy to stay accommodative * Global asset performance tmsnrt.rs/2yaDPgn NEW YORK/LONDON, May 14 (Reuters) - U.S. stocks extended their recovery on Friday as investors set aside inflation worries and bought shares hammered by the week’s volatility, with the shift back into riskier assets dragging on the dollar. The bounce in U.S. equities was in step with gains in global stocks, as investors heeded assurances from the U.S. Federal Reserve that there would be no imminent move to tighten monetary policy, and reduce the gush of cash that has propelled financial markets higher. By early morning, the Dow Jones Industrial Average was up 0.7%, the S&P 500 climbed 1.1%, and the Nasdaq Composite climbed 1.7%. In keeping with gains across global equities, the MSCI World Index, which tracks 50 markets, jumped 1.2%. “Our 12-month target for the S&P 500 is 4,300, which represents 15% return,” said Arthur Hogan, chief market strategist at National Holdings Corp, adding that investors should focus on building a diversified portfolio. Mega-cap growth stocks, which have been beaten down this week on concerns over their lofty valuations, led gains in early trading with Apple Inc, Amazon.com Inc and Microsoft Corp gaining about 1% each and Tesla Inc adding 2%. After fears of rising prices burst into the fore this week and spooked markets, Fed official Christopher Waller signalled on Thursday that rates would not rise until policymakers either see inflation above target for a long time, or a situation of excessively high inflation. That appeared to calm markets, for now. The U.S. dollar dropped as risk appetites recovered and the prospect of sooner interest rate hikes, which burnishes the currency’s appeal, faded. Against a basket of six major currencies, the U.S. dollar index shed 0.41% to 90.374. Data released on Friday that showed U.S. retail sales unexpectedly stalled in April as the boost from stimulus checks wore off, further bolstered arguments that the economic recovery was far from roaring, and that rate hikes may be some time off. Indeed, benchmark 10-year Treasury yields dipped following retail sales figures to stand at 1.6454%. Pull-backs in the dollar and Treasury yields lifted bullion prices, with spot gold up 0.5% at $1,836.31 an ounce. Oil prices also jumped as they clawed back some of the losses seen the previous day. Brent crude was up 1.7% at $68.19 a barrel, while U.S. West Texas Intermediate crude was up 1.6% at $64.84 a barrel. In cryptocurrencies, bitcoin recovered to trade above $50,000 on Friday, jumping 3.1% from a 2-1/2-month low hit the previous day. Editing by Marguerita Choy and Mark Heinrich Our Standards: The Thomson Reuters Trust Principles.