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World stocks rise for fourth day running

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Sterling advances after UK budget

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Oil stabilises after fall on signs of Ukraine-Russia peace

deal

(Updates after UK budget)

By Marc Jones

LONDON, Nov 26 (Reuters) - Growing U.S. rate cut bets

lifted stocks for a fourth straight day on Wednesday, while

Europe's markets saw an extraordinary few hours as Britain's

fiscal watchdog inadvertently published crucial new forecasts

ahead of a bruising UK budget.

When the full UK budget details did come from finance

minister Rachel Reeves they contained another round of tax hikes

but the

early release

of the Office for Budget Responsibility's Economic and

Fiscal Outlook had already caused a reaction.

Sterling and gilt yields had both

rallied as the OBR's figures painted a better-than-expected

picture on the UK's fiscal headroom, and then yo-yoed as Reeves

delivered her speech.

"The problem is this budget has backloaded most of the

fiscal tightening and for what matters has near term fiscal

loosening. Hence the mixed market reaction," Mizuho strategist

Evelyne Gomez-Liechti said.

Before the time Reeves wrapped up UK stocks were up 0.4%

while broader European equities were up 0.6%. MSCI's world

stocks index gained 0.4% with Wall Street poised

for a higher restart later too.

Traders' focus on the UK budget reflected the high-wire act

for its under-pressure government and finance minister Reeves.

Little more than a year after ordering 40 billion pounds

($52.7 billion) of tax hikes - the biggest since the 1990s and

which she promised would be a one-off - economists estimate

Reeves is now piling on another 20-30 billion pounds of

increases to try and plug the fiscal dam.

It all nudged sterling up to $1.32, while 10-year

gilt yields - the main proxy of UK borrowing costs

ticked up to 4.46% having dropped to 4.48% the previous day -

their lowest in almost two weeks.

The day's other main moves saw the yen, which has been on a

downward spiral in recent weeks, reverse an initial bounce

against the U.S. dollar triggered when sources told Reuters the

Bank of Japan was preparing for a possible rate hike as soon as

next month.

That would shift the central bank to more hawkish ground and

comes after a meeting last week between new Prime Minister Sanae

Takaichi and BOJ Governor Kazuo Ueda.

Takaichi's high approval ratings are also prompting Japanese

opposition parties to ramp up preparations for snap elections,

the Yomiuri newspaper reported on Wednesday.

The kiwi dollar surged as much 1.2%, meanwhile, after the

Reserve Bank of New Zealand cut interest rates 25 basis points

to 2.25%, but removed its dovish guidance, signalling an end to

the central bank's easing cycle.

Its antipodean neighbour, the Aussie dollar, jumped

0.5% too after a hotter-than-expected inflation report

reinforced bets that rate cuts are over for the time being there

as well

RATE EXPECTATIONS

Oil prices also remained choppy. Brent remained near a

five-week low after Ukrainian President Volodymyr Zelenskiy had

signalled on Tuesday he was ready to advance a U.S.-backed peace

plan.

That could pave the way for a relaxation of sanctions on

Russian oil firms. Brent was at $62.50 in London

trading. U.S. President Donald Trump also said on Tuesday a deal

was near, but investors know there remains a long way to go.

Wall Street futures were pointing to a fourth day of gains

amid the broader rise in market sentiment after Tuesday's

lacklustre U.S. retail sales and consumer confidence data had

firmed up Fed rate cut expectations and offset some ongoing tech

and AI jitters.

Traders are now heading into a busy holiday shopping

period starting with the Thanksgiving break on Thursday,

followed by Black Friday and Cyber Monday - a crucial period for

retailers.

Before all that though, investors get weekly jobless claims

later and a delayed September durable goods report, scheduled

for 8:30 a.m. ET. The Fed's snapshot of economic conditions, the

Beige Book, is then due at 2 p.m. ET.

Fed funds futures now price an implied 80.7% probability of

a 25-basis-point cut at the Fed's December 10 meeting, compared

to even odds a week ago, according to the CME Group's FedWatch

tool.

The yield on benchmark 10-year Treasury notes

hovered at 4.019%, little changed from its U.S. close of 4.002%,

after it briefly broke below the 4% threshold for the first time

this month.

Asia's overnight share gains had been led by another 2%

surge from the Nikkei, although Japanese government bond

short-term yields rose to the highest since the global financial

crisis in 2008 as their selloff resumed.

Hong Kong and China's equities had lagged the broader stocks

rally, though, after underwhelming Q4 guidance from AI

front-runner Alibaba ( BABA ) left its shares down over 1%.

Spot gold was up 0.8% at $4,163.58 per ounce, while

bitcoin, which has plummeted 30% in recent months,

remained just below $87,000.

(Additional reporting by Gregor Stuart Hunter in Singapore and

Joice Alves in London; Editing by Conor Humphries and Nick

Zieminski)