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(Updates after U.S. market open, changes byline, previous dateline London)
* Trump 'State of the Union' address in focus
* French polls push yields lower
By Sinead Carew
NEW YORK, Feb 27 (Reuters) - World stock markets and the U.S. dollar fell on Monday while U.S. Treasury yields rose amid investor caution ahead of a key speech by U.S. President Donald Trump.
The dollar fell ahead of Trump's State of the Union address, during which he is expected to unveil details on pro-growth policies including infrastructure spending.
"There is setting up for what people expect might be at least a focus on things like fiscal stimulus and infrastructure spending of some kind, that might actually boost risk and cause yields to rise," said Aaron Kohli, an interest rate strategist at BMO Capital Markets in New York.
U.S. 10-year Treasury notes were last down 7/32 in price to yield 2.342 percent, from a yield of 2.317 percent late Friday. Two-year notes US2YT=RR were last down 1/32 in price to yield 1.169 percent, from a yield of 1.145 percent late Friday.
The dollar was down 0.3 percent against a basket of major currencies after Trump said Monday that tax reform details would not be revealed until after the administration's proposal on healthcare.
Investors had hoped for "more clarity around tax reform sooner rather than later" said Bipan Rai, senior macroeconomic strategist at CIBC Capital Markets in Toronto.
At 11:25 a.m. ET, the Dow Jones Industrial Average was down 5.62 points, or 0.03 percent, at 20,816.14, the S&P 500 shed 0.2 points, or 0.01 percent, to 2,367.14, while the Nasdaq Composite added 1.63 points, or 0.03 percent, to 5,846.93.
Europe's benchmark index of leading 300 shares fell 0.1 percent.
MSCI's benchmark world stock index slipped 0.03 percent after it hit a record high Thursday.
A proposed 29 billion euro merger between the London Stock Exchange and Deutsche Boerse to create Europe's biggest stock exchange looked dead in the water due to an inability to meet European antitrust demands. Shares in both companies fell. The London Stock Exchange fell as much as 3 percent while Deutsche Boerse fell as much as 4 percent.
"The regulatory hurdles were always a risk, and with Brexit, there are additional hurdles to clear that seem close to insurmountable now," said Neil Wilson, senior market analyst at ETX Capital.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.24 percent, while Japan's Nikkei fell 0.9 percent for its lowest close since Feb. 9 on concerns that a stronger yen would crimp corporate earnings.
The Dow Jones Industrial Average scaled its 11th consecutive record high on Friday, the longest such run since 1987, leading some to suggest it could be prone for a correction.
In Europe, the focus was on France, where the latest polls showed that centrist Emmanuel Macron would score a more convincing victory over far-right and anti-euro Marine Le Pen in the presidential election's runoff vote.
France's 10-year bond yield fell to a one-month low of 0.88 percent
In commodities, Brent crude was up 0.3 percent at $56.14 per barrel while U.S. West Texas Intermediate was up 0.4 percent at $54.20 per barrel as a global supply glut appeared to ease. (Additional Reporting by Jamie McGeever and Dhara Ranasinghe; Editing by Bernadette Baum)