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Major US stock indices hit record highs, Stoxx 600 up 0.8%

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Chinese shares gain 3% on stimulus hopes

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German politics also in focus, German yields rise

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10-year Treasury yield retreat before Fed's rate decision

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British, Swedish central banks cut rates, Norway holds as

expected

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Fed meeting still to come

By Koh Gui Qing and Kevin Buckland

NEW YORK/LONDON, Nov 7 (Reuters) - Shares on Wall Street

scaled record highs on Thursday, lifting stock markets around

the world, while U.S. Treasuries yields retreated as investors

processed a second Donald Trump presidency and awaited a Federal

Reserve policy decision.

The Fed is expected to cut interest rates by 25 basis points

at the end of its policy meeting on Thursday, a decision that

may seem a footnote given the uncertain economic terrain it may

soon navigate under a second Trump administration.

"We think it more likely that the Federal Open Market

Committee cuts by 25 bps, signalling that pauses could be

appropriate at future meetings if inflation prospects

deteriorate," said Steve Englander, head of global G10 foreign

exchange research and north America macro strategy.

The S&P 500 rose 0.5%, the Dow Jones Industrial

Average added 0.12%, and the Nasdaq Composite

jumped 1.1%. All three indices hit new all-time highs for a

second consecutive day. The MSCI index for world stocks

climbed 0.8%, also to a record high.

Europe's broad STOXX 600 index was last up 0.8%

after Asian shares gained earlier in the day, with even onshore

Chinese blue chips rising 3% as investor optimism over

potential stimulus outweighed concerns about worsening trade

tensions.

Stocks are "rewarding the presumed likelihood of corporate

tax cuts and perceiving a general penchant toward deregulation

across industries as positive for earnings," said Naomi Fink,

chief global strategist at Nikko Asset Management.

"On the other hand, bond markets have responded

unfavourably, with yields rising on the prospect of a united

front between executive and legislative arms of government with

respect to fiscal expansion."

"This comes at a time when U.S. debt-to-GDP is already at

historic highs near 120% and budget deficits already exceed 6%

of GDP," she said.

The benchmark 10-year yield was last at 4.3628%, down 6.3

basis points on the day, after a 14 basis point rise

on Wednesday, and the 30-year yield was last at 4.5576%, down

over 4 bps after the previous day's 15 bp jump.

The dollar fell 0.9% against a basket of its peers

after logging its biggest one-day gain in more than two years on

Wednesday. Traders said they were closing out profitable bets on

the Trump presidency and ahead of the Fed's decision.

The euro climbed 0.9% to $1.0824 after

Wednesday's 1.8% fall, as investors also digested political

turmoil in Germany where Chancellor Olaf Scholz sacked his

Finance Minister Christian Lindner, causing the ruling

three-party coalition to collapse and setting the stage for a

snap election.

Deutsche Bank analysts said, while it was too early to

say, the developments could be positive for the euro due to the

potential confidence boost from a more stable German government

and the direct economic effects of a potentially more pro-active

fiscal stance.

Germany's 10 year government bond yield was last up 2 basis

points at 2.414%.

CENTRAL BANK DECISIONS

The day's main scheduled macro economic event is the Federal

Reserve meeting later in the day. Markets were still

confident of a 25 basis-point cut, but slightly

reduced bets on further easing in December.

Longer term, Trump's proposed tariffs and immigration

policies risk stoking inflation, potentially hampering the path

to lower rates.

In advance of the Fed, the Bank of England cut interest

rates by a quarter point on Thursday for only the second time

since 2020, but said future reductions were likely to be

gradual, as it saw higher inflation after the new government's

first budget last week.

Sterling extended its gains slightly after the

decision, and was last up 1% at $1.3006, following a 1.24% slide

on Wednesday.

Central banks in Norway and Sweden also held meetings on

Thursday, though they met markets expectations and did little to

disrupt currency markets. Norges Bank at the hawkish end of the

developed market spectrum kept rates unchanged at a 16-year

high, and Sweden's Riksbank cut by 50 bps.

Bitcoin caught its breath on Thursday, easing 0.3% to

$75,408, following its vault to a record high $76,499.99

overnight. Trump had vowed to make the United States "the crypto

capital of the planet".

Gold added 1.5%, following Wednesday's more than 3%

tumble, to $2,698.14 an ounce. However, that was still not far

from its recent record high of $2,790.15.

Oil slipped, extending a sell-off triggered by the U.S.

presidential election, as a strong dollar and lower crude

imports in China outweighed supply risks from a Trump presidency

and output cuts caused by Hurricane Rafael.

Brent crude oil futures fell 0.7% to $74.42 per

barrel. U.S. West Texas Intermediate (WTI) crude shed

0.7% to $71.19.