* Futures tracking Nasdaq 100 index rose 1.07%

* South Korean stocks up more than 17%; US futures rise

* BOJ holds rates, but signals willingness to raise rates

(Updates with latest yen move)

By Niket Nishant and Rae Wee

July 31 (Reuters) - Global stocks rallied on Friday as

robust results from Amazon ( AMZN ) and Microsoft ( MSFT ) reassured bruised

investors to return to AI trade, while currency traders stayed

alert to intervention a day after Japanese authorities likely

stepped in to prop up the yen.

The yen abruptly strengthened against the dollar

before giving back the gains, with traders alert to the prospect

of a second round of intervention. The dollar briefly fell

against the yen but soon rebounded to trade at 159.94 yen.

Meanwhile, investor worries that the AI rally may soon run

out of steam eased after Microsoft's ( MSFT ) earnings on

Wednesday, where it forecast generating cash throughout fiscal

2027.

Amazon ( AMZN ) followed a day later with its strongest

cloud growth in more than four years, calming investors eager

for signs that the billions being poured into AI buildout are

bearing fruit.

South Korea's battered KOSPI leapt 17.91%, mounting

a record comeback after heavy losses earlier this week. The

tech-heavy bourse, still about 30% off its all-time high, has

become emblematic of the sharp swings in investor sentiment

towards AI-related stocks.

"Investors are increasingly focused on capital efficiency,

financing and the long-term economics of hyperscalers' AI

spending rather than on near-term demand," said Saverio Papagno,

portfolio manager of North Square Growth Opportunities ETF.

While worries about competition from China and AI

hyperscalers' debt reliance swirl, selloffs could be a buying

opportunity for long-term investors as "the sector will resume

its leadership" once there is greater clarity, he said.

Futures tracking the tech-heavy Nasdaq 100 index

rose 1.07%, while S&P 500 and Dow futures rose

0.44% and 0.48%, respectively.

In Europe, the STOXX 600 index hit a record high

and was poised for its fourth consecutive month of gains.

The MSCI All Country World Price index

gained 0.89% and was on track to snap a two-week losing streak.

It will still end the month with losses of 0.32% should current

levels hold.

YEN CHOPPY AFTER BOJ HOLDS RATES

The yen had gained on Thursday, when Japan conducted

yen-buying, dollar-selling intervention, a market source said.

"I don't think intervention can or will be significantly

potent in reversing the trend in yen weakness. It will have to

come alongside the promise of more reinvestment in domestic

assets and quicker pace of hiking from the BOJ," said Edward

Acton, rates strategist at GMO.

The BOJ kept interest rates unchanged on Friday, but

signalled its resolve to push up borrowing costs.

At a press conference, BOJ Governor Kazuo Ueda said

inflation risks were skewed to the upside, and the central bank

was prepared to speed up the pace of rate hikes should monetary

conditions be accommodative.

WAR KEEPS MARKETS ON EDGE

The Middle East conflict remains a major overhang for global

equities. Fresh strikes in the region have dashed hopes of an

imminent resolution, and diplomatic efforts to end the war have

proceeded in fits and starts.

Oil prices rose sharply in July, with Brent crude

headed for monthly gains for the first time since March.

"The shock absorbers in oil markets are dwindling fast, so a

failure to de-escalate would be materially costlier than

previous rounds of tension," wrote Teddy Bunzel, head of Lazard

Geopolitical Advisory at Lazard Asset Management.

Shipments through the crucial Strait of Hormuz remain

disrupted. The alternative route through the Bab el-Mandeb

Strait has also come under attack from the Iranian-backed

Houthis, further worsening the outlook.

The yield on the 30-year U.S. Treasury slipped 2.32 basis

points but held close to 19-year highs. Short-end yields eased,

steepening the curve as doubts grow over the Federal Reserve's

ability to anchor inflation expectations.

The Fed stood pat on rates earlier this week, but commentary

from the chair confused markets.