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Gold, Nikkei STOXX 600 notch record highs

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Franc weakens, yen recoils from near multi-decade lows

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Fed still forecasting 75 basis points of rate cuts this

year

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Bank of England decision at 1200 GMT

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(Updates with Swiss bank rate cut, details throughout)

By Tom Westbrook and Alun John

SINGAPORE/LONDON, March 21 (Reuters) - The franc

weakened on Thursday after Switzerland became the first

developed economy to cut interest rates this cycle, underscoring

investors' view that global rate cuts are coming soon and

lifting shares around the world to record highs.

Gold prices and share benchmarks in Japan and Europe had

already followed the S&P 500 to all-time peaks earlier on

Thursday after the Federal Reserve indicated it would stick with

its plans to cut interest rates this year.

The Bank of England wraps up a bumper week for global

central banks later in the day but is expected to keep rates

steady.

The Swiss National Bank cut its main interest rate by 25

basis points to 1.50%, a surprise move which caused the currency

to weaken. The euro rose by as much as 1.2% to

0.978, its highest since July 2023, and the dollar

gained around 1% to 0.8963 francs.

The Swiss benchmark index was up 1% outperforming a 0.6%

gain in Europe's STOXX 600 index, though the broad European

benchmark is already at record highs. Swiss bond yields fell.

"We've watched with great interest Powell's speech and

the SNB today, and it broadly validates the narrative that,

although we had a bit of heat in some inflation prints and

services inflation, overall central banks are in a relatively

comfortable spot," said Samy Chaar, chief economist at Lombard

Odier.

"The area where it was most comfortable is Switzerland

because inflation is constrained, and let's keep in mind they

had to revise significantly down their inflation forecast," he

said, referring to the Swiss central bank.

U.S. Federal Reserve Chair Jerome Powell said on

Wednesday recent high inflation readings had not changed the

underlying "story" of slowly easing price pressures as the

central bank stayed on track for three interest rate cuts this

year and affirmed that solid economic growth will continue.

The Fed left U.S. rates on hold between 5.25% and 5.5%

on Wednesday, as expected, and market pricing currently reflects

expectations that the Fed and the European Central Bank will

start cutting rates at their June meetings.

U.S. S&P 500 futures were up 0.3% pointing to

further gains on Thursday, after the benchmark hit a new

record high Wednesday. Earlier, Japan's Nikkei and

Taiwan weighted index each climbed 2% to record levels.

U.S. Treasuries rallied on Wednesday before steadying with

two-year yields last 4.583% and 10-year yields

at 4.235%. European bonds also rallied with

Germany's 10 year yield down 4 basis points at 2.39%. pUS/]

Lower yields also helped non-yielding gold rise to a

fresh record high of $2,222.39 an ounce, and was last trading

just below that, up 0.8%.

CARRY ON

In foreign exchange markets, the dollar dipped on prospects

of U.S. rate cuts, before rebounding, though that bout of

weakness briefly helped Japan's yen recover from near

multi-decade lows to 150.27 per dollar.

The yen was last at 151.1 per dollar, flat on the

day, with the euro down 0.18% at $1.0902.

The pound was steady at $1.2275 ahead of a Bank of

England meeting, at which the central bank looks set to keep its

cards close to its chest on Thursday and not speed up its

progress towards cutting interest rates.

With foreign exchange volatility at around

two-year lows, however, traders say the dollar can still draw

support from interest rates that are higher than peers, at least

for now.

"One of the bigger carry stories is probably the dollar

itself," said Patrick Hu, a G10 currency trader at Citi in

Singapore, who focuses on yen.

"The lack of geopolitical headlines or big news is leading

to good carry trades that have been popular since the start of

this year, in the absence of a bigger trading theme out there."

Brent crude futures, up 5.6% in little more than a

week on supply concerns were steady at $85.82 a barrel.

Iron ore futures - down some 20% this year in

Singapore on worries about China's growth and demand - are

staging a bit of a rebound and analysts at ANZ said the market

might be finding a bottom.

(Editing by Sam Holmes and Miral Fahmy)