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Global equities sidestep geopolitical worries

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Gold holds near record, oil prices tick up

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US PPI, CPI figures this week to give final clues on Fed

move

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Markets factoring in 8% chance of outsized Fed cut next

week

By Kevin Buckland and Jaspreet Kalra

TOKYO/MUMBAI, Sept 10 (Reuters) - Global shares gained

on Wednesday and the dollar steadied ahead of key U.S. inflation

data which could impact the Federal Reserve's policy outlook,

while geopolitical uncertainty lifted oil prices and kept gold

near record highs.

The pan-European STOXX 600 rose 0.5%, taking the

baton from gains in Asian stocks where Japan's Nikkei

added 0.9% while Hong Kong's Hang Seng gained over 1%.

European shares were led higher by gains in Spanish

fast-fashion giant Inditex and Novo Nordisk

which rose following the Wegovy maker's announcement of

restructuring steps, including job cuts.

MSCI's gauge of global equities nudged

higher while equity futures pointed to a positive start for

shares on Wall Street as well, a day after the S&P 500

and Nasdaq posted new record closing highs.

Buoyant equities and steady currency markets appeared to

largely sidestep geopolitical worries spurred by Israel's attack

on Hamas leadership in Qatar on Tuesday and after Poland

scrambled its own and NATO air defences to shoot down drones

following a Russian air attack on western Ukraine.

Poland's blue-chip index was down 2%, one of few

regional indices in the red in Europe.

"The Pavlovian response of investors has been to fade

geopolitical risk," said Ben Laidler, head of equity strategy at

Bradesco BBI, referring to pullback spurred by previous

geopolitical flare ups that proved to be attractive entry points

for investors.

The broader market sentiment remains bullish despite

multiple risks and some of that could be finding an expression

in hedges via gold, Laidler said.

Gold lingered close to its record high hit in the

previous session. It was last up 0.5% at $3643.92 per ounce. It

has risen over 5% over September so far, also helped along by

firming of Fed rate cut wagers.

Traders see a rate cut by the Fed next Wednesday as a sure

thing, and even lay 8% odds on a super-sized half-point

reduction, the CME Group's FedWatch Tool shows.

A week earlier, markets had assigned a 7% probability on the

Fed holding rates steady, but another dismal monthly payroll

number last week convinced investors the Fed had no cushion to

wait any longer to support the economy.

The final hurdles to that view will come on Wednesday and

Thursday, in the form of producer and consumer inflation

readings, respectively.

Analysts reckon that an upside surprise could spur investors

to lighten bets on rate cuts later this year but is unlikely to

meaningfully change expectations for September.

Markets took in their stride a court ruling that temporarily

blocked President Donald Trump from removing Federal Reserve

Governor Lisa Cook, a case which is likely to end up before the

Supreme Court.

Investors are keenly following the legal battle as it could

upend the central bank's long-held independence.

U.S. Treasury bonds declined for a second day on Wednesday,

pushing yields higher. The 10-year Treasury yield

ticked up to 4.0836%, after climbing almost 3 basis points on

Tuesday. Bond yields rise when prices fall.

The focus this week is also on the European Central Bank's

policy decision due on Thursday. It is widely expected to keep

rates unchanged.

A month ago, economists were split on the likelihood of

further rate reductions by the ECB, but sentiment has shifted

with recent data showing inflation holding close to the 2%

target and unemployment at a record low.

"We see slightly negative euro risks around the ECB's

September meeting, with our economists expecting a slightly

dovish press conference, also given ECB market pricing. But we

would not expect this meeting to be much of an event for FX,"

analysts at BofA Global Research said in a note.

The euro was last steady at $1.1705. The U.S.

dollar index, which measures the currency against six

rivals, eased slightly to 97.78, paring earlier small gains.

In commodities, Brent crude futures rose 0.7% to $67

a barrel, while U.S. West Texas Intermediate crude futures

gained 0.8% to $63.13.

Prices had settled up 0.6% in the previous trading session

after Israel said it had attacked Hamas leadership in Doha,

which Qatar's prime minister said threatened to derail peace

talks between Hamas and Israel.