(Updates to U.S. market open)

*

Wall Street stocks rebound, led by Alphabet

*

Fiscal worries send super-long bond yields higher

*

Moves a warning to governments, says Deutsche Bank CEO

*

Japanese state borrowing costs hit record highs

*

Gold races above $3,500 amid safe-haven scarcity

*

Sterling, yen pressured by debt market woes

By Lawrence Delevingne and Naomi Rovnick

Sept 3 (Reuters) - Wall Street stocks recovered on

Wednesday after Alphabet gained on a favorable antitrust ruling

and investors awaited labor market data that could influence the

central bank's upcoming interest-rate decision.

Alphabet jumped around 8% in early trading, while

Apple ( AAPL ) also gained about 2% as the ruling allowed Google

to continue lucrative payments to the iPhone maker. Broadly, the

Dow Jones Industrial Average was little changed, the S&P

500 rose 0.4%, and the Nasdaq Composite

added 0.73%.

At the same time, a sell-off in global long-dated bonds sent

Japan's government borrowing costs to record highs on Wednesday,

as mounting concerns over government debt sustainability and

long-term inflation also rattled investors in Europe.

Spot gold hit an all-time high of $3,557 as the rush

out of long-term government debt, traditionally considered

low-risk, sparked a hunt for alternative safe-haven assets.

The 30-year Japanese government bond yield hit an

unprecedented 3.28% on Wednesday, following a sell-off in

similarly dated British gilts, U.S. Treasuries

and Canadian bonds in the prior session.

"The economic reforms needed to really cover increasing debt

are lacking, and the capital market sees that," Deutsche Bank

chief executive Christian Sewing said about the long-dated debt

sell-off in comments at a conference on Wednesday morning.

The trend may continue, he added, "if we see a further

increase in political instability, if we don't see any

reforms".

British finance minister Rachel Reeves is expected to raise

taxes in her autumn budget to remain in line with her fiscal

targets, while in France Prime Minister Francois Bayrou looks

set to lose a confidence vote as opposition parties balk at his

spending cuts.

In Japan, government departments have just presented record

budget requests and senior aides to Prime Minister Shigeru

Ishiba, including Secretary-General Hiroshi Moriyama, have

offered to resign following their party's defeat in July's upper

house election.

On Wednesday, British 30-year gilt yields rose 6 basis

points to a fresh post-1998 high of 5.752%, before recovering to

last trade at 5.65%.

Germany's 30-year yield stood at 3.37%,

remaining close to its highest level in 14 years.

The global trend would likely feed on itself, some analysts

said, because higher yields in Japan meant Japanese savers who

had for decades looked to overseas assets for income now had

fewer reasons to buy non-domestic government debt.

"Global bond markets no longer benefit from the Japanese

hunt for yield," L&G Asia head of investment strategy Ben

Bennett said. "It's a perfect storm for long-dated bonds and a

headache for governments."

RIPPLE EFFECTS

The gap between 2-year and 30-year U.S. government bond yields

stands at about 130 bps, around its highest since

December 2021, while the comparable measure in Britain

is the highest since 2017.

The 30-year U.S. Treasury yield briefly rose above 5% during

Asia trade and last stood at 4.971% and, with yields at this

level, investors are starting to watch for spillovers into other

asset classes.

"The 5% level is going to be impactful to equities," said

Josh Chastant, portfolio manager, public markets at GuideStone

Funds. "And you are starting to see some of that pressure."

Britain's pound briefly fell to a four-week low of $1.343

, before recovering a little. Japan's yen was

a touch softer at 148.64 per dollar after sliding 0.8% in the

previous session.

The dollar index, which measures the greenback

against a basket of currencies including the yen and the euro,

fell 0.1%.

European stock markets remained unscathed as traders pinned

their hopes on an anticipated U.S. rate cut later this month,

with Europe's STOXX index up 0.46%.

But Japan's broad Topix share index closed almost

1.1% lower and MSCI's broad index of Asia-Pacific shares outside

Japan dropped 0.4%.

TARIFF TREMORS

European purchasing managers' indexes on Wednesday, viewed

as barometers of overall economic conditions, showed expansion

in Germany had slowed and France remained in contractionary

territory as businesses dealt with U.S. President Donald Trump's

unpredictable tariff policies.

Trump on Tuesday said his administration would ask the

Supreme Court for an expedited ruling on tariffs that an appeals

court found illegal last week. The court allowed for the tariffs

to stay in place until October 14.

U.S. manufacturing also contracted for a sixth straight

month in August as factories grappled with the impact of import

tariffs, data showed on Tuesday, helping to drive Brent crude

oil 1.4% lower to $68.16 a barrel on Wednesday.

Friday's U.S. nonfarm payrolls data will be preceded by data

on job openings and private payrolls, offering an update on the

labor market that has become the focus of policy debate at the

Fed.