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World stocks rise for fourth day running

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Sterling advances ahead of UK budget

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Oil stabilises after fall on signs of Ukraine-Russia peace

deal

(Updates ahead of UK budget)

By Marc Jones

LONDON, Nov 26 (Reuters) - Growing U.S. rate cut bets

lifted world stocks for a fourth straight day on Wednesday,

while in Europe hopes were growing for a Ukraine peace deal and

UK markets were bracing for a bruising budget later.

Europe's early 0.2%-0.4% gains echoed the day's 0.3% rise

for MSCI's world stocks index as gains in Asia,

and from Wall Street, extended this week's easing of recent AI

and tech jitters.

Focus was already turning to the UK budget, expected to

begin around 1230 GMT, for what will be a high-wire act for its

under-pressure government and finance minister Rachel Reeves.

Little more than a year after ordering 40 billion pounds

($52.7 billion) of tax hikes - the biggest since the 1990s and

which she promised would be a one-off - Reeves is expected to

pile on another 20-30 billion pounds of increases to try and

plug the fiscal dam.

Traders preempted it all by nudging sterling to $1.3170

, although investors in UK government bonds, the FTSE 100

and FTSE 350 were all waiting nervously to

see how much gets raised and who pays for it.

"Bond markets will be watching very closely, ultimately

being the arbiter as to whether the Chancellor has done enough

to put the country's debt on a sustainable path," said Oliver

Faizallah, Head of Fixed Income Research at Charles Stanley.

The day's other main moves saw the yen, which has been on a

downward spiral in recent weeks, rally 0.2% against the U.S.

dollar as sources told Reuters the Bank of Japan is preparing

markets for a possible rate hike as soon as next month.

That would shift the central bank to more hawkish ground and

comes after a meeting last week between new Prime Minister Sanae

Takaichi and BOJ Governor Kazuo Ueda.

Takaichi's high approval ratings are also prompting Japanese

opposition parties to ramp up preparations for snap elections,

the Yomiuri newspaper reported on Wednesday.

The kiwi dollar surged 1.2% after the Reserve Bank of New

Zealand cut interest rates 25 basis points to 2.25%, but removed

its dovish guidance, signalling an end to the central bank's

easing cycle.

Its antipodean neighbour, the Aussie dollar, jumped

0.5% too after a hotter-than-expected inflation report

reinforced bets that rate cuts are over for the time being there

as well.

Oil prices remained choppy. Brent had hit a five-week low

after Ukrainian President Volodymyr Zelenskiy had signalled on

Tuesday he was ready to advance a U.S.-backed peace plan.

That could pave the way for a relaxation of sanctions on

Russian oil firms. Brent was at $62.50 in London

trading. U.S. President Donald Trump also said on Tuesday a deal

was near, but investors know there remains a long way to go.

RATE EXPECTATIONS

The day's broader rise in market sentiment came after U.S.

retail sales rose less than expected and consumer confidence

sagged, firming up expectations for another Fed interest rate

cut next month.

Fed funds futures now price an implied 80.7% probability of

a 25-basis-point cut at the Fed's December 10 meeting, compared

to even odds a week ago, according to the CME Group's FedWatch

tool.

The yield on benchmark 10-year Treasury notes

hovered at 4.009%, little changed from its U.S. close of 4.002%,

after it briefly broke below the 4% threshold for the first time

this month.

Ahead of the UK budget, 10-year gilt yields

ticked up almost 2 basis points to 4.51% having dropped more

than 5 the previous day to 4.48% - their lowest in almost two

weeks.

Asia's overnight share gains had been led by another 2%

surge from the Nikkei, although Japanese government bond

short-term yields rose to the highest since the global financial

crisis in 2008 as their selloff resumed.

Hong Kong and China's equities had lagged the broader stocks

rally though after an underwhelming Q4 guidance from AI

front-runner Alibaba ( BABA ) left its shares down over 1%.

Spot gold was up 0.8% at $4,163.58 per ounce, while

bitcoin, which has plummeted 30% in recent months,

remained just below $87,000.

(Additional reporting by Gregor Stuart Hunter in Singapore;

Editing by Conor Humphries)