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Euro STOXX 600 up 0.6%

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Investors lap up riskier assets again

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Fed Chair Powell leaves door open to further easing

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French stocks jump after LVMH earnings

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Dollar slips

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Gold crosses $4,200 for first time

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US-China trade tensions continue to simmer

(Updates prices to reflect early afternoon European trading)

By Tom Wilson

LONDON, Oct 15 (Reuters) - Stocks globally recovered

some of their recent losses on Wednesday after comments by U.S.

Federal Reserve Chair Jerome Powell boosted investor hopes of

further rate cuts this year, pressuring the dollar.

European shares gained 0.6%, with French stocks

adding 2.4% as LVMH shares jumped 12% after

the world's largest luxury group reported upbeat earnings, in

turn boosting the wider sector.

The positive mood was set to propel Wall Street stocks, too.

Nasdaq futures were last up 0.8%, with S&P 500 futures

advancing 0.6%.

FED CHAIR POWELL STRIKES DOVISH TONE, MORE CUTS EXPECTED

Powell on Tuesday left the door open to further rate cuts

and said the end of the central bank's long-running effort to

shrink the size of its holdings may be coming into view.

Powell "struck a more dovish tone than expected," Deutsche

Bank analysts wrote. His comments on ending the shrinking of the

Fed balance sheet in the coming months "put December on the map

in terms of a halt," they added.

His remarks reinforced expectations of more easing this

year, with roughly 48 basis points worth of U.S. cuts priced in

by December.

In turn, the U.S. dollar dropped 0.2% against a

basket of peers, with the yen and the Australian dollar the

standout performers, recovering from steep drops against the

dollar last week.

Solid earnings results from U.S. banking giants and an

upward revision of the International Monetary Fund's 2025 global

growth forecast also underpinned the market.

MARKET SENTIMENT REMAINS FRAGILE

Still, sentiment remained fragile, underscored by safe-haven

gold breaking through $4,200 an ounce for the first time

to extend its record-breaking run.

Markets have been volatile in recent days, rocked by the

escalation in the U.S.-China trade war after U.S. President

Donald Trump announced additional 100% duties on Chinese goods

in retaliation for Beijing's dramatically expanded export

controls on rare earths.

Trump said on Tuesday that Washington was considering

terminating some trade ties with China, while the U.S. and China

also began charging additional port fees on ocean shipping

firms.

"It does suggest that a lasting truce is not going to be

easy to achieve. But it's also a reminder as well, that the

market does need to be mindful that... they shoot these arrows

and then they sort of walk them back," said Tony Sycamore, a

market analyst at IG.

Signs of economic strain flashed in China, too, where

deflationary pressures persisted, data showed. Both consumer and

producer prices fell in September.

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

rose 2.1%, with Hong Kong stocks adding

2%.

FRENCH BONDS RALLY AS POLITICAL GRIDLOCK AVOIDED

The French government bond risk premium over safe-haven

Bunds tightened further, as fading prospects of snap elections

eased political risk, even though analysts cautioned the threat

may only be postponed.

Prime Minister Sebastien Lecornu promised on Tuesday to

suspend a landmark pension reform until after the 2027 election,

avoiding more political gridlock in the EU's second-biggest

economy.

French 10-year yields fell to 3.37%, the lowest

level since August 15, bringing the decline so far this week to

10 basis points, heading for the largest weekly decline since

May.

"I think anything that will bring some relief to the

back-and-forth within the French parliament is an absolute win,"

said Juan Perez, director of trading at Monex USA.

The euro was last 0.2% higher at $1.163. The British

pound gained 0.2% against the dollar to $1.3349, as

finance minister Rachel Reeves confirmed tax rises and spending

cuts were on the horizon.

Oil prices slipped as investors weighed predictions of a

supply surplus in 2026. Brent crude futures down 0.2% to

$62.27 a barrel, while U.S. crude eased 0.1% to $58.63

per barrel.