*

Yen weakens, Nikkei rises 1.8% after Ishiba resignation

*

Stocks rise as traders pencil in rate cut in September

*

French political quagmire adds to investor angst

*

US inflation data this week also in focus

(Updates to Asia afternoon)

By Ankur Banerjee

SINGAPORE, Sept 8 (Reuters) - Stocks rose and the dollar

wobbled on Monday after dismal U.S. labour data sealed the case

for an interest rate cut this month, while the yen fell as

investors girded for uncertainty in Japan following the

resignation of Prime Minister Shigeru Ishiba.

Gold prices held near a record-high while U.S. Treasury

yields hovered close to five-month lows after data showed the

world's largest economy created far fewer jobs than expected in

August, with markets factoring in chances of a jumbo rate cut.

Much of the focus last week was on elevated long-end bond

yields across the globe as investors fretted about the state of

various countries' finances from Britain and France to Japan.

Some of those worries could return after Japan's Ishiba

resigned on Sunday, while France could be looking for its fifth

prime minister in three years as Francois Bayrou faces a

confidence vote on Monday, which he is expected to lose.

The political uncertainty gripping Japan, the world's

fourth-largest economy and France, the euro zone's

second-biggest economy, will likely limit any exuberant reaction

to the prospect of rate cuts from the Federal Reserve.

European futures advanced 0.45%, while S&P 500

futures pointed 0.08% higher on Monday after a volatile

session on Friday where the index hit a record high but then

closed 0.3% lower.

The yen fell across the board and was last 0.6%

lower at 148.39 per dollar, while the Nikkei surged

1.8%, just shy of its recent record-high. The benchmark 10-year

Japanese government bond (JGB) yield was flat at 1.57%.

MSCI's broadest index of Asia-Pacific shares outside Japan

was 0.4% higher. Hong Kong's Hang Seng index

gained 0.35%.

The spotlight will be on who replaces Ishiba, with investors

fretting that an advocate of looser fiscal and monetary policy,

such as Liberal Democratic Party veteran Sanae Takaichi, who has

criticised the BOJ's interest rate hikes, could take the helm

next.

"The markets are going to be framing this around what it

means for fiscal policy, inflation and the BOJ's response," said

Kyle Rodda, senior financial market analyst at Capital.com.

RATE CUTS ARE HERE

Investor attention this week will be on the U.S. inflation

report on Thursday to gauge the risk of rising prices that could

help temper some of the enthusiasm for a larger rate cut.

The U.S. two-year yields, which are tied to interest rate

policy, were 2 basis points (bps) higher at 3.527%,

near the five-month low of 3.464% hit on Friday.

Traders have fully priced in a 25 bps cut later this month

with an 8% chance of a jumbo 50 bps rate cut, the CME FedWatch

tool showed. They are anticipating 68 bps of easing by the end

of this year.

"The Fed has more than enough reasons and will cut by 25bps

... with another two within six-months," said George Boubouras,

head of research at K2 Asset Management.

"U.S. cash rates are notably higher than other developed

markets (and) given the resilient and robust U.S. economy, lower

cash rates are now required. Fed commentary of further rate cuts

will be supportive, without this equity markets will be

weaker."

In the currency market, the euro eased a bit to

$1.1712 after surging 0.6% on Friday, while sterling

last fetched $1.3495 after a 0.5% rise on Friday.

In commodities, gold prices were at $3,588 per ounce, just

shy of the $3,600 milestone. Gold is up 37% this year

after rising 27% in 2024.

Oil prices climbed after OPEC+ agreed over the weekend to

raise output at a slower pace from October on expectations of

weaker global demand. Brent crude and U.S. West Texas

Intermediate crude rose more than 1% each.