*

European shares stall after gains for Asia and Wall Street

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Sterling shuffles higher ahead of tight BoE decision at

1200 GMT

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Traders pare back bets of Fed cut in December

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Gold claws back above $4,000 an ounce

(Updates after European markets open)

By Marc Jones and Rae Wee

LONDON/SINGAPORE, Nov 6 (Reuters) - European shares

slipped on Thursday, having uncoupled from Asia and Wall Street

this week, while the pound edged up from an overnight low as

traders weighed the likelihood of an early interest rate cut

later.

Asia's main markets had made solid gains overnight

as investors there swooped back in after sharp tech-led selloffs

this week, but for Europe it was all largely functional.

The pan-European STOXX 600 lost 0.3% as an 11%

slump in French data-centre equipment firm Legrand's shares

added to recent worries around sky-high tech

valuations and Germany's Commerzbank weighed on the banking

sector.

Over in the currency markets, the dollar was just

below multi-month highs after some upbeat U.S. data on Wednesday

and as traders waited on the day's main business - the 1200 GMT

rate decision for the BoE.

Sterling was up 0.3% at $1.3080 having edged up from

a seven-month low of $1.3011 overnight. Investors now see

a roughly 40% chance of a rate reduction, with finance minister

Rachel Reeves hinting this week she will raise UK taxes later

this month. 0#GBPIRPR

"I think out of all the G7 central banks, the Bank of

England is in the trickiest position," Allspring multi-asset

portfolio manager Rushabh Amin said, explaining that he expects

the BoE to hold off from a cut until after Reeves' November 26

budget.

"We are a bit underweight (on sterling) into the budget" he

added, although that could be readjusted in the coming weeks. "I

think the base case is just higher volatility."

BOND MARKET MOVES

In the bond markets, gilt yields - the proxy for UK

government borrowing costs - were little changed at 4.47%, while

German bund yields dipped from a 4-week high.

U.S. Treasury yields mostly held their overnight gains as

traders continued to trim bets on a Federal Reserve rate cut

next month, something which has pushed the dollar to a

five-month peak.

Data on Wednesday showed the U.S. services sector activity

increased to an eight-month high in October as new orders grew

solidly, while private payrolls rose 42,000 last month,

exceeding expectations.

"We actually are not too worried about the job market," said

Keiko Kondo, head of multi-asset investments for Asia at

Schroders.

"Market is tight, companies are probably investing more in

technology, probably not necessarily hiring more people, but not

firing people either. So probably the way that even the economy

and the labour market operate is changing a bit."

EYE ON THE FUTURES

Wall Street futures pointed to a largely steady start there

later where investors remain focused on trade tariff legal

rulings and on the ongoing government shutdown.

On the tariff front, U.S. Supreme Court justices raised

doubts on Wednesday over the legality of President Donald

Trump's sweeping tariffs, in a case with implications for the

global economy that marks a major test of Trump's powers.

Asia had seen Japan's Nikkei rebound 1.4% after

sliding 2.5% on Wednesday.

Hong Kong's Hang Seng rose 2.1%. South Korea's Kospi

also jumped more than 2% shortly after it opened but

then lost traction to end a more modest 0.8% higher having

tumbled 2.85% in the previous session.

In China, Shanghai's benchmark stock index reclaimed the

psychologically important 4,000 level, as optimism over tech

self-sufficiency boosted semiconductor and artificial

intelligence-related shares.

"We do see the potential broadening out of this rally," said

Daniel Blake, Morgan Stanley's Asia and emerging markets equity

strategist, referring to the rally in Chinese markets which has

been led by technology companies.

Allspring's Amin, however, said it was one of the markets it

was thinking about taking profit on following this year's rally.

The 10-year U.S. Treasury yield was last at

4.1473%, having risen nearly seven basis points in the previous

session, while the two-year yield stood at 3.6213%.

Wednesday's upbeat U.S. economic data releases have led to

traders now pricing in a roughly 61% chance of a Fed cut in

December, down from about 70% earlier in the week.

Against the yen, the dollar was down 0.3% in European

trading to 153.70. The euro was up 0.2% at $1.1515.

In commodities, oil prices edged higher, with Brent crude

futures up 0.6% at $63.95 a barrel while gold

rose 0.7% to back above $4,000 an ounce.

"The odds of a December Fed funds rate cut are drifting

further south," said Jose Torres, senior economist at

Interactive Brokers.