*

Google, Microsoft earnings signal Wall Street relief rally

*

US consumption data also aids sentiment

*

Japan's yen sinks to another 34-year low

(Updated at 2:49 p.m. ET (1849 GMT)

By Chris Prentice and Naomi Rovnick

NEW YORK/LONDON, April 26 (Reuters) - Global stocks were

higher on Friday as Big Tech gains lifted Wall Street shares,

while Japan's yen hit a fresh 34-year low after the Bank of

Japan (BOJ) opted to keep monetary policy loose at its latest

meeting.

MSCI's gauge of stocks across the globe

rose 7.37 points, or 0.98%, to 762.99 amid tech sector optimism

following robust results from Alphabet and Microsoft.

U.S. data also boosted sentiment, with the consumption

expenditures (PCE) price index up 0.3% in March, in line with

estimates by economists polled by Reuters. In the 12 months

through March, PCE inflation advanced 2.7% against expectations

of 2.6%.

The Dow Jones Industrial Average rose 204.60

points, or 0.54%, to 38,290.93, the S&P 500 gained 56.27

points, or 1.11%, to 5,104.69 and the Nasdaq Composite

gained 309.18 points, or 1.98%, to 15,920.94.

Europe's benchmark stock index had its biggest one-day gain

in more than three months on Friday, closing up 1.2%, on gains

in banking and industrial stocks. The technology sector got a

boost from upbeat results from U.S. megacaps.

Japan's yen was volatile, hitting a fresh 34-year low after

the Bank of Japan (BOJ) kept monetary policy loose at its latest

policy meeting, spiking briefly as traders speculated that

Japanese authorities may intervene, then sliding again.

World equities were still poised to finish the month lower,

as hopes of rapid Federal Reserve rate cuts drained from the

market following a series of U.S. inflation readings.

In a volatile session, the Japanese currency hit a

fresh 34-year low.

The Bank of Japan kept interest rates around zero at its

policy meeting that concluded Friday, despite forecasting

inflation of around 2% for three years.

Markets are on high alert for Tokyo authorities to prop up

the currency, in what would be an unconventional and politically

tough decision. BOJ Governor Kazuo Ueda said on Friday that

exchange-rate volatility could significantly impact the economy.

U.S. Treasury Secretary Janet Yellen told Reuters on

Thursday that currency intervention was acceptable only in

"rare" circumstances and that market forces should determine

exchange rates.

Yellen also said U.S. economic growth was likely stronger

than suggested by weaker-than-expected data on first-quarter

output.

"The stall-out of inflation's return to 2% in the first

quarter is still a disappointment," Bill Adams, Chief Economist

for Comerica Bank in Dallas, said in a market note.

"When the Fed meets next week, they are almost certain to

say that the first quarter's economic data don't hit their high

bar to begin cutting interest rates."

The yen was trading about 40% below its fair value, Pictet

Asset Management chief strategist Luca Paolini said.

"We underestimate the potential for something to go very

wrong when you have a currency that is totally misaligned with

(economic) fundamentals," he said.

"The sooner they hike rates, the better."

FED HOPES FADE

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

fell 3.5 basis points to 4.671%, from 4.706% late on Thursday.

Bond yields rise as prices fall.

The 2-year note yield, which typically moves

in step with interest rate expectations, fell 0.1 basis points

to 4.9975%, from 4.998%.

Traders now expect the Fed to lower its main funds rate,

currently at a 23-year high of 5.25% to 5.5%, by just 36 basis

points this year, with some fearing a further hike.

Euro zone government bond yields were on track for the

second straight weekly rise as market expectations for

cumulative European Central Bank rate cuts this year dropped way

below 75 basis points on the back of strong U.S. economic data.

Germany's 10-year bond yield, the benchmark

for the euro zone, fell 5 bps to 2.61% but is set for a weekly

rise of 7 bps after being up 15 bps the week before.

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

closed 0.75% higher at 535.58, while Japan's

Nikkei rose 306.28 points, or 0.81%, to 37,934.76.

Spot gold added 0.35% to $2,339.85 an ounce. U.S.

gold futures gained 0.13% to $2,332.90 an ounce.

U.S. crude gained 0.12% to $83.67 a barrel and Brent

rose to $89.33 per barrel, up 0.36% on the day.

(Editing by Mark Potter, David Evans and Toby Chopra)