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French bonds hold gains

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JPMorgan ( JPM ) CEO warns of market risks

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Three major US stock indexes down

(Updates to late afternoon)

By Caroline Valetkevitch

NEW YORK, Oct 9 (Reuters) - Major stock indexes eased on

Thursday, while the dollar climbed to its highest level against

the Japanese yen since mid-February as investors weighed the

outlook for Japan's fiscal policies.

Stocks have been mostly rising in recent sessions, with the S&P

500 hitting a record closing high on Wednesday, despite an

ongoing U.S. government shutdown and political risk in Japan and

France that has made investors nervous.

The euro was also down again against the dollar on Thursday.

Oil prices fell, with investors weighing a ceasefire deal in

Gaza that could ease Middle East tensions against stalled peace

talks in Ukraine.

Safe-haven demand and a weaker dollar drove gold above $4,000

an ounce for the first time this week. Spot gold was last

down 1.6% at $3,973.10.

The newly elected leader of Japan's ruling party, Sanae

Takaichi, said she did not want to trigger excessive declines in

the Japanese currency. The dollar briefly eased against the yen

after the comments.

The greenback was last up 0.24% at 153.04 yen after

earlier reaching 153.21, the highest since February 13.

In the U.S., the federal government shutdown, which began last

week, has left investors without key economic reports.

Despite Thursday's weakness, the stock market remains buoyant,

said Adam Sarhan, chief executive of 50 Park Investments in New

York, adding that stocks could weaken if the government shutdown

lasts for a substantial period of time.

"We're in a very strong bull market that refuses to fall in

a meaningful fashion," he said. "I'm expecting a pullback at

some point but for now the environment is very strong."

The Dow Jones Industrial Average fell 297.20 points,

or 0.63%, to 46,306.65, the S&P 500 fell 27.40 points, or

0.40%, to 6,726.41 and the Nasdaq Composite fell 62.14

points, or 0.27%, to 22,981.65.

JPMorgan Chase ( JPM ) CEO Jamie Dimon said there was a

heightened risk of a significant correction in the U.S. stock

market within the next six months to two years, citing factors

including geopolitical tensions, government spending and

remilitarization around the world.

MSCI's gauge of stocks across the globe fell

4.38 points, or 0.44%, to 991.73.

The pan-European STOXX 600 index

ended 0.43% lower,

dragged down

by steep losses in HSBC ( HSBC ) and Ferrari.

French bonds held on to gains from the day before on

optimism the country can avoid a snap election. French President

Emmanuel Macron's office said on Wednesday he would appoint a

new prime minister within 48 hours.

France's 10-year bond yield was 0.2% higher on

the day at 3.529%. The euro was last down 0.64% at

$1.1552.

U.S. crude futures fell $1.04 to settle at $61.51 a

barrel and Brent declined $1.03 to settle at $65.22.

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

1.5 basis points to 4.146%, from 4.131% late on Wednesday.

(Additional reporting by Elizabeth Howcroft in Paris, editing

by Ed Osmond, Kirsten Donovan, Nia Williams and Aurora Ellis)