(Updates prices, adds quote)

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Fed cuts interest rates by 25 basis points

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

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Euro climbs amid German political turmoil

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British, Swedish central banks cut rates, Norway holds as

expected

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. Treasury yields retreated as investors

processed a second Donald Trump presidency and an interest rate

cut from the Federal Reserve.

The Fed lowered rates by 25 basis points on Thursday, as

expected, noting that the job market has generally eased while

inflation is moving toward its 2% target. The Fed altered its

language on inflation slightly, saying price pressures had "made

progress," compared to prior language that it had "made further

progress".

"The Fed didn't rock the boat," said Ryan Detrick, chief

market strategist at Carson Group in Omaha. "The big question

now is will they cut again in December? Our best guess is they

do, as inflation continues to improve."

The S&P 500 rose 0.6%, the Dow Jones Industrial

Average was flat, and the Nasdaq Composite jumped

1.4%. 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 rose 0.6% 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 4.3530%, down 7.3

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

on Wednesday, and the 30-year yield was last at 4.5567%, down

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

The dollar fell 0.6% 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 0.6% to $1.0791 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 4.4

basis points at 2.437%.

CENTRAL BANK DECISIONS

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. The bank 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 0.7% at $1.2969, following a 1.24%

slide on Wednesday.

Central banks in Norway and Sweden also held meetings on

Thursday, though they met market 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 reversed earlier losses and vaulted to

another record high of $76,780 overnight. Trump had vowed to

make the United States "the crypto capital of the planet".

Gold added 1.3%, following Wednesday's more than 3%

tumble, to $2,693.82 an ounce. However, that was still not far

from its recent record high of $2,790.15.

Oil reversed losses from a sell-off triggered by the U.S.

presidential election.

Brent crude oil futures rose 1% to $75.68 per

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

added 1% to settle at $72.36.