(Adds byline, dateline, U.S. market open, comment in paragraphs

4-6, Updates prices at 11:13 a.m. ET (1513 GMT)

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World stocks inch up on rate cut optimism

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Trade quiet in London, Tokyo due to UK, Japan holidays

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Weaker yen keeps markets alert to possible BOJ

intervention

By Herbert Lash and Nell Mackenzie

NEW YORK/LONDON, May 6 (Reuters) - A gauge of global

stock markets rose on Monday on optimism that major central

banks will cut interest rates this year, while the yen weakened

against the dollar after a strong surge last week from Japan's

suspected currency intervention.

Stocks on both sides of the Atlantic rose, with the three

major indices on Wall Street in the green as a

softer-than-expected U.S. labor market report last week slashed

bets that the Federal Reserve might hike rates this year.

The dollar index, a measure of the U.S. currency

against six major trading peers, was lower for a fourth straight

session after data showed the lowest jobs gain since October,

easing concerns the Fed would keep rates higher for longer.

Fed Chairman Jerome Powell "told the market that a hike was

unlikely. Those were his words, 'unlikely,' and therefore they

took that to mean that he wants to cut," said Brad Conger, chief

investment officer at Hirtle Callaghan & Co. in Conshohocken,

Pennsylvania.

But the outlook on rates is still uncertain as the market

hopes rates are restrictive enough to slow the economy and the

pace of inflation, Conger said.

"That's a tenuous linkage, IE, meaning it's a leap of faith

to believe that inflation goes away because activity slows

down," he said. "That's the orthodox view."

On Wall Street, the Dow Jones Industrial Average rose

0.17%, the S&P 500 gained 0.55% and the Nasdaq Composite

advanced 0.60%.

In Europe, the pan-regional STOXX 600 also was

positive, up 0.52%, on signs the European Central Bank is more

confident about cutting rates as euro zone inflation continues

to ease, three ECB policymakers said.

Philip Lane, Gediminas Simkus and Boris Vujcic said

separately that the inflation and growth data cemented their

belief that euro zone inflation, which was 2.4% in April, will

slow to the central bank's 2% target by the middle of next year.

MSCI's gauge of stocks across the globe rose

0.54%.

The dollar held broadly steady, leaving the euro up

0.15% at $1.0774, while sterling strengthened 0.22% to

$1.2571.

In Europe, Goldman Sachs ( GS ) raised its 2024 EPS growth forecast

for STOXX 600 companies to 6% from 3% earlier, the bank

said in a note on Friday.

According to Goldman, a 10% annual rise in Brent prices adds

about 2.5 percentage points to annual EPS growth, and a 10%

weaker euro/dollar exchange rate adds about the same.

Treasury yields ticked higher as investors assessed last

week's subdued job creation, which reinforced view that the U.S.

economy was not overheating enough to derail a rate cut.

The yield on benchmark U.S. 10-year notes rose

1.2 basis points to 4.512%, up from 4.5% late on Friday.

Traders are now pricing in 48 basis points of Fed rate cuts

by year end, with the first cut likely in September, according

to LSEG's rate probability app. In recent weeks, traders had

priced in just one cut due to signs of sticky inflation.

With public holidays in the UK and Japan, markets in

mainland China and Europe got off to an upbeat start also

enjoying the glow from renewed U.S. optimism.

Oil prices were also in focus on the prospects of Saudi

Arabian price hikes and rising tensions in the Middle East, with

U.S. crude up 0.56% to $78.55 a barrel and Brent

higher at $83.39 per barrel, up 0.52% on the day.

On Monday, Israel's military called on Palestinian civilians

to evacuate Rafah as part of a "limited scope" operation, but

did not immediately confirm media reports this was part of

preparation for a ground assault.

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

peaked at its highest level since February 2023

and closed 0.66% higher, while China's blue-chip index

ended up 1.5%.

Hong Kong's Hang Seng Index rose 4.7% last week and

on Friday clocked its longest daily winning streak since 2018,

closing on Monday 0.55% higher.

INTERVENTION WATCH

Elsewhere, traders remained on alert for further volatility

in the yen, after last week's bouts of suspected intervention

from Japanese authorities to stop a sharp slide in the currency.

Tokyo is suspected of having spent more than 9 trillion yen

($59 billion) to support its currency last week, as suggested by

data from Bank of Japan, taking the yen from a 34-year low of

160.245 per dollar to a roughly one-month high of 151.86 over

the span of a week.

The yen gave back some of those gains on Monday and

was last 0.63% lower against the greenback at 153.95 per dollar.

Spot gold added 0.9% to $2,322.19 an ounce.

Bitcoin gained 0.30% to $63,119.00.