(Updates throughout)

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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

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

"Funds and global reserve managers want a hedge against

fiscal recklessness, currency debasement, and unpredictable

government policy, and gold sits squarely at the heart of that

movement," said Chris Weston, head of research at Pepperstone.

Thierry Wizman, global FX & rates strategist at Macquarie

Group, said gold's rally is the collective "hedge" against the

prospective failure of Wall Street's AI-driven tech boom.

"A collapse of that optimistic 'vision' might trigger an

inflationary resolution for the world's sovereign debt overhang,

rather than a productivity-based resolution."

European stocks edged up 0.4%, as gains in banks

and energy stocks 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 0.1-0.25, hinting

at more gains in New York later on.

In France, caretaker Prime Minister

Sebastien Lecornu

on Wednesday said 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 4.5 basis points on the

day at 3.524%, but did little to support the euro,

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

one-month lows at $1.1628.

"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 of

intervention by Japanese authorities.

Hirofumi Suzuki, chief currency strategist at SMBC, said

should the yen head towards near 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 0.8%

to $65.97 a barrel. U.S. West Texas Intermediate crude

increased 0.9% to $62.28.

(Additional reporting by Dhara Ranasinghe in London and Ankur

Banerjee in Singapore; Editing by Sam Holmes and Sharon

Singleton)