(Updates to U.S. market open)

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U.S., global stocks tick up

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Eyes on Fed minutes, Powell speech to support rate cuts

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Oil prices dip

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Gold loses hold on highs above $2,500

By Lawrence Delevingne and Nell Mackenzie

Aug 19 (Reuters) - Wall Street extended gains as the

dollar tipped lower on Monday off the back of last week's

surging stock markets as expectations the U.S. economy would

dodge a recession and cooling inflation would kick off a cycle

of interest rate cuts.

In early trading Monday, the Dow Jones Industrial

Average rose 0.29%, to 40,779.28, the S&P 500

gained 0.19%, to 5,564.56 and the Nasdaq Composite

gained 0.10%, to 17,649.30.

MSCI's broadest index of world stocks had edged up around

0.2%.

The prospect of lower borrowing costs could not sustain

gold's historic highs and the dollar dipped against the euro,

while the yen lunged higher.

In the U.S., Federal Reserve members Mary Daly and Austan

Goolsbee were out over the weekend to flag the possibility of

easing in September, while minutes of the last policy meeting

due this week should underline the dovish outlook.

Fed Chair Jerome Powell speaks in Jackson Hole on Friday and

investors assume he will acknowledge the case for a cut.

"Everything points to this Friday. We'll be looking for any

indication that rate cuts might be on the way. The next question

is, how big will those rate cuts be?" said Paul O'Neill, chief

investment officer of wealth management firm Bentley Reid.

Futures are fully priced for a quarter-point move,

and imply a 25% chance of 50 basis points with much depending on

what the next payrolls report shows.

Analysts at Goldman Sachs downshifted their U.S. recession

expectations to a 20% chance and could push them lower if the

August jobs report due in September "looks reasonably good",

analysts said a note on Friday.

Ahead of the busy week, broad European shares moved

0.4% higher, while the blue-chip FTSE 100 index traded

up 0.3%.

Investors are anticipating flash Purchasing Managers' Index

(PMI) data for France, Germany, Britain and the Eurozone later

this week.

Earlier, the Nikkei index .N225 closed 1.77% lower at

37,388.62, snapping a five-day winning run that pushed it up

8.7% last week. Chinese blue chips closed about 0.3%

higher.

CUTS FOR ALL

The Fed is hardly alone in contemplating looser policy, with

Sweden's central bank expected to cut rates this week, and

possibly by an outsized 50 basis points.

In currency markets, the dollar lapsed 0.77% to 146.47 yen

while the euro firmed to $1.103, just below

last week's peak of $1.1034.

Even as markets have calmed again, it is worth remembering

that the economic fundamentals behind the global markets selloff

two weeks ago have not completely vanished, said Deutsche Bank

macro strategist Henry Allen.

"Economic data has been increasingly soft at a global level,

falling inflation means that monetary policy is increasingly

tight in real terms, geopolitical concerns are elevated, and

we're heading into a tough period on a seasonal basis," said

Allen in a note on Monday.

A softer dollar combined with lower bond yields could not

hold gold at its zenith and it fell to around $2,486 an ounce

, down from its all-time peak of $2,509.

Oil prices dipped as concerns about Chinese demand continued

to weigh on sentiment.

U.S. crude lost 0.33% to $76.4 a barrel and Brent

fell to $79.42 per barrel, also down about 0.33% on the

day.