*

Yen at lowest level since February, stokes intervention

risks

*

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

*

Political turmoil in France in spotlight, weighs on euro

By Ankur Banerjee

SINGAPORE, Oct 8 (Reuters) - Asian stocks tracked Wall

Street lower on Wednesday as investors grappled with the fallout

from political drama in France and Japan, while a prolonged U.S.

government shutdown catapulted gold spot prices to a record

$4,000 per ounce level.

The Japanese yen hovered near eight-month lows as

investors awaited fiscal policy cues from prime

minister-in-waiting Sanae Takaichi, while the euro was

under pressure after French prime minister Sebastien Lecornu

resigned on Monday.

That left the dollar fairly upbeat. The dollar index,

which measures the U.S. currency against six other units, hit

its highest level since the end of August, although sentiment

remained dim as the shutdown was due to enter its eighth day.

In stocks, MSCI's broadest index of Asia-Pacific shares

outside Japan fell 1%, inching away from the

4-1/2 year high it hit on Tuesday. China and South Korea markets

were closed for a long holiday.

Japan's Nikkei rose 0.35%, just shy of the record

peak touched in the previous session.

All eyes are on the Japanese markets after a surprise

victory over the weekend for fiscal dove Takaichi spurred

worries over the fiscal and monetary policy outlook, with

traders swiftly cutting their bets on another hike this year.

"Takaichi's victory in the ruling Liberal Democratic Party

leadership race has shifted the balance of risks to a later rate

hike in 2026," said Carol Kong, currency strategist at

Commonwealth Bank of Australia.

Kong said option traders are now the least bearish on

dollar/yen since September 2022 but she still expects the dollar

to trend lower against the yen in the near term.

The yen weakened to 152.33 per U.S. dollar, trading at its

lowest level since mid-February. The yen is down over 3% for the

week, on pace for steepest weekly decline in a year, stoking

worries of intervention from Japanese authorities.

The euro fell 0.26% to $1.1628, hitting its lowest

level in a month as markets braced for further political

upheaval in France.

France's President Emmanuel Macron faced growing pressure to

resign or hold a snap parliamentary election to end political

chaos that has forced the resignation of five prime ministers in

less than two years.

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.

Meanwhile, all three U.S. indexes ended in negative

territory after a survey from the New York Federal Reserve

showed deteriorating consumer expectations and rising inflation

projections.

Investors have had to rely on secondary, independently

produced data, along with remarks from monetary policymakers, to

gauge the likelihood that the Federal Reserve will implement its

second rate cut of the year at this month's policy meeting.

Traders are pricing in 45 basis points of easing this year.

The prospect of impending rate cuts and safe haven demand has

pushed gold prices higher. It rose to $4,000.96 per ounce

on Wednesday, taking its gains for the year beyond 50%.

Thierry Wizman, global FX & rates strategist at Macquarie

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

prospective failure of the U.S.'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."

(Editing by Sam Holmes)