*

European stocks lower, driven by banks

*

French bonds hold on to Wednesday's gains

*

JPMorgan ( JPM ) CEO warns of market risks

(Updates throughout after European market open)

By Elizabeth Howcroft

PARIS, Oct 9 (Reuters) -

European stocks opened lower on Thursday, in a move driven

by banking shares, while investors weighed up the risk of a

market correction after AI-enthusiasm helped Asian stocks reach

new highs overnight.

Wall Street hit fresh

record highs

in the previous session, as investors bet on gains in

technology stocks, despite a U.S. government shutdown leaving

traders without some key

economic data

.

The U.S. shutdown and political risk in Japan and France

have made investors nervous this week, creating safe-haven

demand which, along with a weaker dollar, has driven gold above

$4,000 for the first time.

STOXX DOWN 0.3% ON THE DAY

The STOXX 600 was down 0.3% on the day at 0903 GMT

and London's FTSE 100 was down 0.3%,

hit by losses

at

HSBC ( HSBC )

and

Lloyds Banking Group ( LYG )

but partially offset by gains in mining and

technology stocks.

The MSCI World Equity Index was flat on the day

.

"It just feels like the mood is a little bit fragile,"

said Fiona Cincotta, senior market analyst at City Index.

"It does feel that we're lacking substance to any move

that we're seeing, because we're not getting that data out of

the U.S."

In a sign of rising caution among investors, JPMorgan

Chase ( JPM ) CEO Jamie Dimon

said

there was a heightened risk of a significant correction in

the U.S. stock market within the next six months to two years,

citing factors including geopolitical tensions, government

spending and remilitarization around the world.

U.S. President Donald Trump

announced

late on Wednesday that Israel and Hamas had reached a

ceasefire and hostage deal

.

French bonds held on to Wednesday's gains after

President Emmanuel Macron said that he would name a new prime

minister by Friday evening, which

raised hopes

that the country could avoid a snap election and agree a

budget.

The 10-year French government bond yield was at 3.5082%

, while the benchmark German 10-year yield was 2.692%

.

The

dollar

index made small gains, up 0.1% on the day at 99.971, but

still down around 8.9% on the year overall. The euro was in its

fourth day of declines, down 0.1% at $1.1615.

The Japanese yen hit an eight-month low of 153 per

dollar overnight, but was last a touch stronger at 152.76

.

An economist advising the policy circle of Japan's

likely new premier Sanae Takaichi

told Reuters

that the yen's current weakness benefits the economy, and

the hit to households from rising import costs can be offset by

aggressive fiscal spending.

Oil prices were steady, as traders waited to see if the

ceasefire and hostage deal

between Israel and Hamas would hold.

Gold was little changed, at $4,041.29.

International Monetary Fund Managing Director Kristalina

Georgieva on Wednesday

forecast

a slight slowdown in global growth in 2025 and 2026,

warning investors not to get too comfortable, but said the world

economy has proven more resilient than expected.

China

tightened

its export controls of rare earth technology, expanding

April's restrictions.