(Updates prices)

* MSCI All-World rose almost 14% in the quarter, its best

second-quarter performance since 2020

* Dollar gained 1.4% against major currencies this quarter

* Yen touched 162.38 per dollar, near its weakest level in

40 years

By Amanda Cooper

LONDON, June 30 (Reuters) - Global stocks were headed for

their best second-quarter performance in six years on Tuesday,

while a resurgent dollar pushed the yen to a four-decade low and

was headed for a fourth straight quarterly rise.

Within the past three months, the Strait of Hormuz has

re-opened gradually and haphazardly as hostilities between the

U.S. and Iran receded into a fragile ceasefire, knocking 20% off

the price of oil. In addition, a dramatic shift in

expectations for U.S. interest rates has occurred, against a

backdrop of a seemingly unstoppable boom in artificial

intelligence stocks.

The MSCI All-World index has risen almost

14% to record highs in the last three months, marking its best

second-quarter performance since 2020.

Most of the gains have been powered by a scorching rally in

anything AI-related, particularly in Asian markets, where

indexes in Japan, South Korea and Taiwan

have logged double-digit percentage gains. The S&P 500 is

also up 14% and the Nasdaq, which welcomed $2 trillion

SpaceX to its ranks in June, has gained 20%.

"The one theme that's disappeared largely is monetary policy

support," said Guy Miller, chief market strategist at Zurich

Insurance Group. "At the beginning of the year, the futures

market was pricing further rate cuts. Now, that's changed. And

that's been a function largely of the situation with Iran and

the higher commodity prices."

"The take-away for us, however, is that while we're not

expecting further cuts from the central banks, we're not

expecting a start of a hiking cycle as such."

Europe's STOXX 600, which does not have nearly as many

AI beneficiaries as many Asian or U.S. indexes, was up 1.1%,

heading for a quarterly gain of 10%, having risen every month

since March.

U.S. stock futures were up between 0.1% and 0.2%, suggesting a

modest increase at the opening bell later.

THE WINNING DOLLAR

The dollar has been the standout winner this quarter in the

foreign exchange market, gaining 1.4% against a basket of

major currencies.

Investors are amassing bullish positions at a record pace

thanks to a remarkable re-pricing of the U.S. interest rate

outlook, which has flipped from cuts to hikes, due to the

surprising strength of the U.S. economy and persistent

inflationary pressures beyond energy prices.

The dollar's rise has driven gold to its largest

quarterly fall in more than a decade, while the yen has

been driven to its weakest point in 40 years to trade around

162.38 per dollar on Tuesday. Traders were already on edge about

possible Japanese intervention, with Finance Minister Satsuki

Katayama issuing another warning.

The world's most influential central bankers are in the

Portuguese town of Sintra this week for the European Central

Bank's annual meeting and no one will be more in the spotlight

than new Federal Reserve Chair Kevin Warsh, who is scheduled to

address the gathering on Wednesday.

Warsh's focus on inflation at his first meeting as head of

the Fed earlier this month prompted traders to almost fully

price in the prospect of a rate hike by October, but some

economists believe the economy is strong enough, and inflation

evident enough, to mean an increase could come as soon as July.

"Of all the major central banks, (Fed policymakers) are

probably the only ones where there's a plausible case that they

could go in July, that they could hike to get it out of the way,

in a way," said Isabelle Mateos y Lago, BNP Paribas group chief

economist.

"That's not our base case, but there's a very meaningful

probability that they might want to do that and really kind of

get it out of the way and move on."

But before Warsh's appearance, there is an array on Tuesday

of European inflation reports, as well as U.S. consumer

confidence data for June and the monthly hirings and firings

JOLTS report, as the clock ticks down to Thursday's U.S. monthly

jobs report.

(Additional reporting by Dhara Ranasinghe in London and Tom

Westbrook in Singapore; Editing by Muralikumar Anantharaman,

Stephen Coates, Thomas Derpinghaus and Alexander Smith )