(Updates latest price moves, adds analyst quote and AMD chip

supply deal)

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French stocks and bonds tumble after prime minister

resigns

*

Nikkei hits all-time high, yen slumps after policy dove

elected

ruling party head

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Bitcoin and gold jump as traders snap up alternative

assets amid

US government shutdown

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Oil rises in relief rally after OPEC+ increases output by

less

than expected

By Lucy Raitano and Kevin Buckland

TOKYO/LONDON, Oct 6 (Reuters) - Global stocks firmed on

Monday after recovering from an earlier rout when the collapse

of the French government took markets by surprise, while

political developments in Japan lifted Japanese equities but

weighed on the yen.

New French Prime Minister Sebastien Lecornu resigned on

Monday, barely 14 hours after appointing his cabinet.

At 1150 GMT, the pan-European benchmark STOXX 600

was up 0.13%, but France's CAC 40 was still down 1.2%,

having earlier sunk as much as 2.2%.

U.S. S&P 500 futures firmed 0.3% ahead of the open,

with the cash index having risen to a record high on

Friday.

TECH SHARES BOOSTED BY AI CHIP DEAL

AI enthusiasm is partly behind the market firmness, with

stocks staying near record highs even as a U.S. government

shutdown rumbles on. Tech shares in Europe got a small

boost after news that AMD has signed an AI chip-supply

deal with OpenAI on Monday, and were last up 1.1%.

Market attention stayed on France, with the country's bank

shares hardest hit. BNP Paribas, Societe Generale

and Credit Agricole fell between 3.8% and

4.8%.

"The bigger concern for the market is really what comes

next, because if Macron decides to appoint another prime

minister that's going to be the sixth PM in two years," said

Michael Brown, senior research strategist at Pepperstone.

Any newcomer would face the same challenging parliamentary

arithmetic and problems when trying to pass the budget, said

Brown.

French political instability has ramped up since Emmanuel

Macron's re-election in 2022, with no party or grouping holding

a parliamentary majority.

The euro slipped 0.6% to $1.1678, and sterling

was off 0.33% to $1.3426.

GOLD HITS RECORD HIGH

In Japan, stocks surged more than 5% to an all-time high

while the yen skidded on Monday after fiscal and monetary dove

Sanae Takaichi was elected as leader of the ruling party,

putting her on course to become the nation's first female prime

minister.

Meanwhile, gold climbed to a record peak close to $4,000,

while leading cryptocurrency bitcoin rallied to a lifetime high

on Sunday, with investors increasingly turning to alternative

assets as a store of value as the U.S. government shutdown

frayed nerves.

Japan's Nikkei soared above 48,000 for the first

time after Takaichi beat the more moderate Shinjiro Koizumi in

the Liberal Democratic Party's leadership vote on Saturday,

stoking expectations for fiscal stimulus.

"Takaichi seems very pro-growth and pro-markets, and that's

been felt in the Japanese equity market this morning ... that

will put more fuel into Asian equity markets," said Rory

McPherson, CIO at Magnus Financial Discretionary Management.

The yen slumped as much as 2% to beyond 150 per U.S. dollar

for the first time since August 1, and slid as much as

1.8% to an all-time low versus the euro at 176.25.

Worries about Japan's finances sent the yield on 30-year

government bonds to an all-time high.

SHORT-DATED JAPANESE GOVERNMENT BOND YIELDS SLIDE

At the same time, short-dated Japanese government bond

yields slid to a two-week low as traders pared

bets on when the Bank of Japan will resume raising interest

rates.

Market-implied odds of a BOJ hike by year-end fell to 41%

from 68% on Friday.

A year ago, Takaichi criticised the BOJ's decision to raise

rates as "stupid", although her recent rhetoric has been more

restrained, saying only that central bank policy should be

aligned with the government.

"We believe concerns among some investors that the next

administration might pursue extreme fiscal expansion or exert

political pressure on the BOJ are overblown," Morgan Stanley

MUFG Securities economists wrote in a research report, noting

that Takaichi's stance appears closely aligned with BOJ Governor

Kazuo Ueda's cautious approach to policy normalisation.

Most other major share markets around the region were closed

for holidays, including mainland China, South Korea and Taiwan.

Gold last changed hands around $3,936 after advancing

as much as 1.5% earlier to a record just above $3,944.

Bitcoin traded around $124,249 following its jump to

$125,653.32 on Sunday.

Oil prices rose after OPEC+ announced on Sunday it would

increase production by 137,000 barrels per day from November,

the same modest monthly increase as in October, amid persistent

concerns over a looming supply glut.

In the run-up to the meeting, sources said Russia was

advocating an output increase of 137,000 bpd to avoid pressuring

prices, but Saudi Arabia would have preferred double, triple or

even quadruple that figure to regain market share more quickly.

Brent crude futures gained 0.6% to $64.92 a barrel.