(Updates throughout)

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Stocks rally as Fed officials boost chances of December

rate cut

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Dollar heads for monthly gain; yen near 10-month low

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Trump briefs Japan PM Takaichi on his call with China's Xi

By Scott Murdoch and Amanda Cooper

SYDNEY/LONDON, Nov 25 (Reuters) - Global stocks rose on

Tuesday after Federal Reserve officials breathed more life into

expectations for a December interest rate cut, prompting

investors to pile into technology stocks, shrugging off concerns

about the sector becoming overheated.

Google parent Alphabet is closing in on a $4-trillion

valuation, set to become only the fourth company to reach that

mark, showing investors believe the AI-fuelled tech boom is set

to continue.

MSCI's All-World index rose for a third day,

lifting off last week's two-month lows, as shares in Europe

edged up 0.2% and U.S. stock index futures

neared positive territory.

RISING RATE CUT BETS

The yield on benchmark 10-year Treasury notes

was flat at 4.036%. The two-year yield, which falls

with traders' expectations of lower Fed fund rates, was steady

at 3.49% in Europe, after dropping 2.5 basis points in the

previous session.

The prospect of a U.S. interest rate cut is rising after Fed

Governor Christopher Waller said available data indicated that

the U.S. job market remained weak enough to warrant another

quarter-point cut. His remarks followed those of New York Fed

President John Williams, who suggested late on Friday that a cut

in December was a possibility.

Markets are pricing in an 81% chance of a quarter-point cut

next month, according to CME's FedWatch Tool, up from 42.4% a

week ago. The U.S central bank meets on December 9 and 10.

Later on Tuesday, investors will be able to sift through

delayed data on retail sales, wholesale inflation, home prices

and consumer confidence, although these may not have much impact

on their thinking about what the Fed might do next month.

The shift in rate expectations over the last week has

boosted stocks, but had limited impact on the dollar. So far

this month, it has gained against every major currency

except the offshore Chinese yuan, which has strengthened

around 0.5%.

"This suggests, to me, that the FX market remains in a mindset

of trading on growth differentials over anything else and, with

the U.S. economy outperforming peers now, as well as likely

continuing to do so into 2026, bodes well for the buck moving

forwards," Pepperstone senior research strategist Michael Brown

said.

TENSION OVER JAPAN

Most notably, the dollar has forged higher against the

Japanese yen, which is hovering around its weakest in 10

months and causing unease among Tokyo officials about the need

for intervention to support it.

The dollar was last down 0.3% on the day at 156.47, having

gained 1.6% in November. The euro was up 0.1% at $1.1531.

Adding to tension around Japanese markets is the ongoing row

between Tokyo and Beijing over a comment by Japan's Prime

Minister Sanae Takaichi earlier in November that a Chinese

attack on Taiwan could trigger a Japanese military response.

Takaichi and U.S. President Donald Trump spoke on Tuesday,

following his call on Monday with Chinese President Xi Jinping.

She said Trump explained U.S.-China relations to her.

Trump said on Monday he would travel to Beijing in April, which

was interpreted as a further sign that diplomatic and political

relations between the two countries were improving following

their trade war truce.

U.S. stock and bond markets will be closed on Thursday for

the Thanksgiving holiday and will trade for half a day on

Friday.

ALPHABET HEADS FOR $4 TRILLION

Alphabet shares rose 2.5% in Frankfurt, suggesting another rally

in U.S. premarket trading, following a report in The Information

that Facebook parent Meta is in discussions with the

company to use its AI chips in its data centres from 2027 and to

rent chips next year.

In commodities, Brent crude futures fell 0.8% to

$62.88 a barrel, under pressure from concerns that global supply

could rise significantly in the coming year relative to demand.

Gold, meanwhile, slipped 0.6% to $4,115 an ounce, but was

still set for a near-3% gain in November.