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Gold topples $4,000 mark, shows no sign of stopping

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Political turmoil in France in spotlight, dents euro

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Yen at lowest since February; intervention risk rises

(Adds comment in paragraph 5, updates prices)

By Amanda Cooper

LONDON, Oct 8 (Reuters) - Global shares rose on

Wednesday, as investors latched on to the prospect of lower

interest rates, shaking off political drama in France and Japan,

while a prolonged U.S. government shutdown catapulted gold

beyond $4,000 per ounce for the first time.

The prospect of a series of rate cuts from the Federal Reserve

and safe-haven demand stemming from economic and political

worries have lifted the gold price by 50% this year to above

$4,000 an ounce.

Traditionally, gold is seen as a store of value during times of

instability. This rally, driven by demand from central banks,

fund managers and retail traders alike, has had a tailwind of a

weaker dollar too.

HEDGE EVERYTHING

"It's obviously benefiting from uncertainty around valuation

of stocks. It's benefiting from the uncertainties in the bond

market. The weakness of the dollar is benefiting gold as well,"

said Chris Iggo, chief investment officer for core investments

at AXA Investment Managers.

"It's not a small market, but it's small compared to the

equity market or the bond market, so people are willing to

increase their allocations to gold as a hedge against everything

else," he said.

European stocks rose 0.6%, as gains in banking

shares helped offset a drop in autos, led by a 7% decline in BMW

shares after the German luxury carmaker cut its 2025

earnings forecast.

U.S. stock futures were up 0.2%, hinting at more

gains in New York later on.

In France, caretaker Prime Minister Sebastien Lecornu said on

Wednesday a deal could potentially be reached on the country's

budget by year-end, making the risk of a snap election more

remote.

His cautiously optimistic tone helped a modest rally in French

bonds, leaving OAT yields down 5.3 basis points on the day at

3.52%, but did little to support the euro, which

headed for its third daily loss in a row, trading around

one-month lows at $1.1629.

"It's another prime minister and it has been pretty volatile,"

Nina Stanojevic, senior investment specialist at St. James's

Place, said.

"It raises two areas of uncertainty - first around fiscal

packages being pushed through and whether we get another snap

election on the horizon, which would affect French OATs."

YEN SLIDES

Political shifts have also driven Japan's yen lower this week.

The currency has hit eight-month lows as investors

await word from prime minister-in-waiting Sanae Takaichi on her

plans for spending and the economy. It last fetched 152.40 per

U.S. dollar.

Takaichi's victory over the weekend has sparked concern among

investors about the impact of her preference for lower rates and

higher spending on the Bank of Japan, which may struggle to

raise interest rates as much as previously expected, which has,

in turn, weighed on the yen.

The yen is down over 3% this week, on pace for its steepest

weekly decline in a year, which has stirred up concern about

intervention by Japanese authorities.

Hirofumi Suzuki, chief currency strategist at SMBC, said should

the yen head towards 160 within one to two weeks, "FX

intervention by the Japanese government would be viewed as more

likely".

The New Zealand dollar sank nearly 1% after the central

bank slashed its benchmark rate by 50 basis points and kept the

door open for further easing, suggesting policymakers were

worried about the frail state of the economy.

The dollar index, which measures the U.S. currency

against six others, hit its highest since the end of August,

although sentiment remained dim as the shutdown entered its

eighth day.

The shutdown has also halted the release of a number of key

economic reports. Markets show traders still expect the Federal

Reserve to cut rates by around 45 bps between now and the end of

the year.

Oil rose on Wednesday as investors brushed off concerns over

excess supply this year. Brent crude futures rose 1% to

$66.07 a barrel.