(Updates throughout with European trading)

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Traders pricing in 60% chance of 25bp Fed cut next month

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Stocks rebound, dollar steady

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Eyes on sliding yen as markets alert to intervention risk

By Rae Wee and Amanda Cooper

SINGAPORE/LONDON, Nov 24 (Reuters) - Global stocks began

an event-filled week on a strong footing on Monday, as investors

took heart from growing expectations of a Federal Reserve rate

cut in December even as policymakers remain divided over such a

move.

Markets are gearing up for potential catalysts, including

the release of U.S. retail sales and producer prices data due

later in the week, while British finance minister Rachel Reeves

is set to unveil her highly anticipated budget on Wednesday.

Geopolitical developments are also in focus. The U.S. and

Ukraine are continuing work on a plan to end the war with Russia

after agreeing to modify an earlier proposal that was seen by

Kyiv and its European allies as too favourable to Moscow.

That weighed on oil prices as a deal could theoretically

release more Russian supply through an easing of sanctions.

EUROPEAN STOCKS CATCH UP

Stocks in Europe rallied in early trading, playing catch-up

with the late bounce on Wall Street on Friday, following days of

turbulence driven in part by worries over lofty tech valuations.

The STOXX 600, which ended last week with a loss of

2.2%, was up 0.5%.

Shares in defence companies slid, but their decline was

offset by gains in tech, drugmakers and banks.

Nasdaq futures and S&P 500 futures rose 0.8%

and 0.55% respectively, while overnight, MSCI's broadest index

of Asia-Pacific shares outside Japan rose 1%.

The latest gains came after influential Fed policymaker John

Williams said on Friday that interest rates could fall "in the

near term", raising the possibility of another cut in December.

"We expect another Fed cut in December, followed by two more

moves in March and June 2026 that take the funds rate to

3-3.25%," said Goldman Sachs chief economist Jan Hatzius in a

note.

"The risks for next year are tilted toward more cuts, as the

news on underlying inflation has been favourable and the

deterioration in the job market ... might be difficult to

contain via the modest cyclical growth acceleration we expect."

Fed funds futures now point to a roughly 60% chance that the

Fed will cut by 25 basis points next month.

DATA FOG PERSISTS

A record U.S. government shutdown that ended earlier this

month has muddied the outlook for U.S. rates, as policymakers

grapple with gaps in data that would normally guide their view

of the world's largest economy.

The U.S. Bureau of Labor Statistics said on Friday it had

cancelled the release of October's consumer price report because

the shutdown had prevented the collection of data.

Generali Investments senior economist Paolo Zanghieri said

he and his team believed the market was pricing in more rate

cuts than the Fed might deliver.

"We see the chance of a cut next month as 50/50. Given

limited new data, it would be reasonable for the Fed to wait

until January, while signalling an easing bias," he said.

"More importantly, market expectations for nearly four

cuts next year, based on hopes for rapid disinflation, appear

too optimistic. We expect only 50 basis points of easing by

summer," he added.

ON ALERT FOR YEN INTERVENTION

The main focus in the currency market was on the yen,

which was pinned near a 10-month low, as the dollar gained

another 0.3% to trade at 156.86 yen. In November so far, the

Japanese currency has lost around 1.8% in value, making it the

worst-performing major currency against the dollar this month.

Traders have been alert to the risk of intervention from

Japanese authorities to prop up the yen, which has come under

pressure from growing worries about the nation's fiscal health

and low domestic rates.

Finance Minister Satsuki Katayama ramped up her verbal

efforts to support the currency last week, which seems to have

put a floor under the currency for now.

"Dollar/yen will definitely be going upwards even if you try

to intervene. So I think they will have to live with this. The

only way for them to do it is intervention to stop the pace

maybe, but I don't think they can stop the direction," said

Saktiandi Supaat, regional head of FX research and strategy for

global markets at Maybank.

The dollar was weaker against most other currencies, given

the rising expectations for the Fed to cut rates next month,

with the euro up 0.16% to $1.15295. The pound was

flat at $1.3098 ahead of Wednesday's budget announcement.

In commodities, Brent crude futures fell 0.5% to

$62.27 a barrel, while spot gold was steady at $4,064 an

ounce.