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U.S. markets look to open lower

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European stocks fall on auto sector

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China shares surge again on stimulus rush

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Fed's Powell to speak ahead of payrolls test

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Oil prices supported by Mideast strife

(Updates prices)

By Nell Mackenzie and Dhara Ranasinghe

LONDON/SYDNEY, Sept 30 (Reuters) - World shares edged

off record highs on Monday as strife in the Middle East fuelled

economic uncertainty, just as China shares posted their biggest

one-day gain in 16 years thanks to Beijing's latest raft of

stimulus policies.

Continued Israeli strikes across Lebanon added geopolitical

uncertainty to the mix, though oil prices were still restrained

by the risk of increased supply.

U.S. stock futures ticked 0.3% lower, while European

stocks fell almost 1% weighed down by profit warnings

and poor growth outlooks from the auto sector.

Japan's Nikkei slumped almost 5% after perceived

monetary policy hawk Shigeru Ishiba won a leadership contest to

become the country's prime minister.

That all left MSCI's world stocks index trading a 0.3%

lower on the day and off a record high touched last week

.

The exception was China. Government stimulus measures

announced last week continued to boost stock markets, with the

blue-chip CSI300 closing up 8.5%, its biggest daily

gain since 2008 adding to its 25% run-up in the last five

trading sessions.

The Shanghai Composite climbed 7.1%, on top of last

week's 13% rally.

Meanwhile, in China brokerages were overwhelmed by a

pre-holiday rush of retail clients, jamming up trading systems

as investors rotated money out of bonds and deposits into

stocks.

"The Chinese stimulus has created some noise but the market

may be front-running these first few steps, which might lead to

disappointment later if measures don't continue," said Matt

Tickle, chief investment officer at consultancy Barnett

Waddingham.

Tickle said he'd take little comfort on longer term themes

until he was certain on what would come next, not only from

China's central bank, but from policymakers around the world.

"It's central bank watch, yet again," said Tickle.

The week is packed with major U.S. economic data including a

payrolls report that could decide whether the Federal Reserve

delivers another outsized rate cut in November.

WALL ST ON A ROLL

The rally in China helped MSCI's broadest index of

Asia-Pacific shares outside Japan firm 0.1%,

having surged over 6% last week to a seven-month high.

Wall Street also had a rousing week helped by a benign

reading on core U.S. inflation on Friday that left the door open

to another half-point rate cut from the Fed.

Futures imply around a 55% chance the Fed will ease

by 50 basis points on Nov. 7, though the presidential election

two days earlier remains a major unknown.

A host of Fed speakers will have their say this week, led by

Chair Jerome Powell later on Monday. Also due are data on job

openings and private hiring, along with ISM surveys on

manufacturing and services.

In currency markets, the dollar was around 0.2% firmer at

142.49 yen, after sliding 1.8% on Friday from a 146.49

top.

The dollar index fell 0.2% to 100.28 after easing

0.3% last week. The euro climbed 0.2% to $1.1190,

having bounced on Friday after a benign U.S. inflation report.

The euro zone releases inflation figures this week, along

with producer prices and unemployment. German inflation and

retail sales are due later on Monday, while European Central

Bank President Christine Lagarde speaks to the European

parliament.

Brent crude oil futures fell 52 cents to $71.46,

while West Texas Intermediate was down 28 cents at $67.90.

While storm Helene had mostly passed, leaving devastation in

many parts of the southern United States, a new tropical

depression headed for landfall was expected to become another

large and powerful hurricane later this week.

Hurricanes that hit the U.S. South and Eastern seaboard

disrupt the supply chain of oil products and stoke supply

concerns from the world's current largest producer of oil.

A softer dollar combined with lower bond yields to help

gold reach $2,685 an ounce. It was last at $2,637 an ounce

, and on track for its best quarter since 2016.