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Stocks rise in holiday trading conditions

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Dollar, US yields steady near milestone highs

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Chinese authorities pledge more support for economy

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Fed outlook remains top of investors' minds

(Updates for late U.S. trade)

By Alden Bentley, Samuel Indyk and Rae Wee

NEW YORK/LONDON, Dec 24 (Reuters) - Wall Street topped

off a global share rally in thin trade on Thursday as markets

prepared for early Christmas Eve closes, while the dollar was

buoyed by firmer Treasury yields and speculation that the

Federal Reserve would slow its easing in 2025.

The Dow Jones Industrial Average was 0.47% higher in

late morning trade, the S&P 500 rose 0.73% and the Nasdaq

Composite rose 0.99%.

U.S. stock trading wraps up at 1:00 p.m. EDT/1800 GMT, and

the bond market closes at 2:00 p.m. Most financial centers

around the world are closed on Wednesday for Christmas. The U.S.

reopens on Thursday, while many financial centers have a second

day off.

"Meagre news and data flow should keep the focus on a more

hawkish Fed," said Ipek Ozkardeskaya, senior analyst at

Swissquote Bank.

MSCI's gauge of stocks across the globe went

up more than half a percent. The pan-European STOXX 600 index

rose 0.18%. Britain's FTSE 100 rose 0.19% and

France's CAC 40 rose 0.14%. German stocks were closed

for the Christmas holiday.

In Asia, Chinese stocks rose after sources told Reuters that

Beijing planned to issue a record amount of special treasury

bonds next year as it ramps up fiscal stimulus to revive a

faltering economy.

The CSI300 blue-chip index and Shanghai Composite

Index both ended 1.3% higher. Hong Kong's Hang Seng

Index advanced 1.1%.

The news came shortly after China's finance ministry said

authorities would ramp up fiscal support for consumption next

year by raising pensions and medical insurance subsidies for

residents, as well as expanding consumer goods trade-ins.

Still, investors remain cautious on the outlook for the

world's second-largest economy, particularly as it faces the

threat of hefty tariffs from U.S. President-elect Donald Trump.

Elsewhere, MSCI's broadest index of Asia-Pacific shares

outside Japan rose 0.37%.

FED FOCUS

Investors are taking direction from last week's 25 basis

point Fed interest rate cut, its signals on the strength of the

economy and its slow progress bringing inflation down to its 2%

target. Markets are now pricing in about 35 basis points of

easing for 2025, implying one quarter-point rate cut and around

a 40% chance of a second.

U.S. Treasury yields pared gains after the Treasury saw

solid demand for a $70 billion sale of five-year notes, but

remained higher on the day. The two-year Treasury yield

, which is sensitive to changes in Fed rate

expectations, was up 0.9 bp at 4.359%, while the benchmark

10-year yield rose 2.6 bp to 4.625%, reaching a

seven-month high at 4.629%.

"Like markets, the Fed will need to consider U.S. policies

on tariffs and immigration in its inflation and growth outlook.

We believe the subtle slowing in the U.S. labor market will

still be the Fed's paramount concern," said analysts at Citi

Wealth.

"While always uncertain, our base case expectation for a

3.75% policy rate is unchanged. It's a far cry from the 1.7%

U.S. policy rate average of the past 20 years."

The Fed's cut was the third one this cycle, taking the Fed

funds rate to 4.25%-4.5%.

Ahead of Trump's return to the White House in January,

global central banks have urged caution over their rate paths

due to uncertainty on how his planned tariffs, lower taxes and

immigration curbs might affect policy.

Data on Monday showed U.S. consumer confidence unexpectedly

weakened in December as the post-election euphoria fizzled and

concerns about future business conditions emerged.

In currencies, the dollar index rose 0.14% hovering

near a two-year high hit Monday, having climbed more than 2% in

December so far.

The euro eased 0.15% to $1.0389, while the yen

languished near last week's five-month low, trading at

157.35 per dollar.

Japan's Finance Minister Katsunobu Kato on Tuesday

reiterated Tokyo's discomfort with excessive foreign exchange

moves and put speculators on notice that authorities are ready

to act to stabilise a faltering yen.

Spot gold rose 0.13% to $2,616.26 an ounce, having

risen about 27% this year, heading for its biggest yearly gain

since 2010.

U.S. crude rose 1.56% to $70.32 a barrel and Brent

rose to $73.73 per barrel, up 1.51% on the day.