World stocks closed in on a 2012 high on Tuesday, lifted by a belief that the U.S. Federal Reserve will continue supporting economic growth with ultra-loose monetary policy.

MSCI's main global stock index was up half a percent <.MIWD00000PUS>. European shares gained 0.4 percent higher, while Japan's Nikkei <.N225> closed up 2.4 percent at its highest level since the devastating March 2011 earthquake and tsunami.

The dollar traded near a one-month low against a basket of currencies <.DXY>.

Fed Chairman Ben Bernanke delivered a relatively cautious outlook for the U.S. economy on Tuesday. While he did not hint at a third round of bond purchases, he made clear the Fed is in no rush to reverse course after responding aggressively to a deep recession.

Investors seem fairly confident that the Q1 equity rally is set to continue, Barclays said in a note, citing a client survey that found 80 percent believed equities to be fairly- or under-valued.

The euro was flat at $1.3341.

Concerns the euro zone debt crisis could flare up again - focused on Spain's tough budget targets - boosted safe-haven German government bonds. June Bund futures were 41 ticks higher at 137.17, with 10-year yields 5 basis points lower at 1.90 percent.

(Reporting by Jeremy Gaunt; Editing by John Stonestreet)