By Herbert Lash and Marc Jones

NEW YORK/LONDON (Reuters) - World shares rallied to their highest since February and the euro hit its strongest in 18 months on Tuesday after European Union leaders agreed on a landmark stimulus package to revive regional economies ravaged by the coronavirus.

The agreement after five days of haggling drove down the risk premium on European assets and pushed gold to its highest in almost nine years. Bullion got an extra boost from a weaker dollar and expectations of more U.S. stimulus from Washington.

The willingness to raise a 750 billion-euro ($857 billion) fund in capital markets on behalf of all 27 EU states was an unprecedented act of solidarity in almost seven decades of European integration.

EU summit Chairman Charles Michel presented the final plan as a "pivotal" moment to dispel doubts about the bloc's future.

The risk of a European break-up receded and the fund should support regional growth over the medium term, Esty Dwek, head of global market strategy at Natixis Investment Managers, told investors.

Germany's DAX index entered positive territory for the year before paring gains to end up 0.96%. The euro rose 0.68% to $1.1522 after touching $1.1539, its highest since early January 2019. The single currency has gained more than 6% in the past three months.

Europe's broad FTSEurofirst 300 index closed up 0.31%. MSCI's benchmark for global equity markets advanced 0.63% to highs last seen in February, when markets crashed on coronavirus fears.

"It's a significant step towards a more integrated and united Europe, which should boost the region's appeal to global investors and facilitate its re-rating," said Barclays' head of European equity strategy Emmanuel Cau.

Hopes that vaccines might be ready by year's end also backed the risk-on sentiment and helped push Italian government bond yields to their lowest since early March. Italy will be a main beneficiary of the fund, as will Spain, Greece, Portugal, Poland and Hungary, whose government bonds also rallied.

On Wall Street, the Dow Jones Industrial Average rose 0.6% and the S&P 500 added 0.17% after regaining positive territory Monday for the year for the first time since June 8. The Nasdaq Composite dropped 0.81%.

The 10-year U.S. Treasury note fell 1.8 basis points to 0.602% after earlier sliding below 0.6%.

With the EU recovery plan sealed, investors will now focus on further U.S. stimulus after $3 trillion was injected earlier this year.

U.S. congressional negotiations aimed at hammering out an agreement on a new coronavirus aid package intensified as COVID-19 infections and deaths surged to record levels across the United States.