(Updates to U.S. market open, Fed Chair comments)

By Lawrence Delevingne and Alun John

Aug 23 (Reuters) - World shares gained on Friday, just

shy of all-time highs, while the dollar languished around

one-year lows after a speech by the world's most powerful

central banker confirmed the U.S. would soon begin interest rate

cuts.

U.S. Federal Reserve Chair Jerome Powell, in a speech on

Friday at the annual economic symposium in Jackson Hole,

Wyoming, said "the time has come" to cut interest rates as

rising risks to the job market left no room for further weakness

and inflation was in reach of the Fed's 2% target, offering an

explicit endorsement of an imminent policy easing.

"What he's suggesting here is if the labor market continues

to weaken, we're looking at a 50-basis-point rate cut in

September as opposed to 25," said Peter Cardillo, chief market

economist at Spartan Capital Securities in New York.

On Wall Street, the Dow Jones Industrial Average

rose 0.69% to 40,993, the S&P 500 gained 0.87% to 5,618

and the Nasdaq Composite gained 1.20% to 17,830.

Europe's broad Stoxx 600 index rose 0.1% after

Asian shares outside Japan had nudged down 0.1%, but Japan's

Nikkei gained 0.4% as investors digested inflation data

and remarks from Bank of Japan Governor Kazuo Ueda flagging a

willingness to raise interest rates if the economy and inflation

turn out as forecast.

That left MSCI's all country world index up

0.8%, and with early August's turmoil in the rear view mirror,

it is now trading near its mid-July all-time peak.

Markets are fully priced for a 25 bp U.S. rate cut in

September and see a cut at each of the Fed's three remaining

meetings this year, and for one to be a larger 50 bp move.

On the final night of the four-day Democratic National

Convention, Vice President Kamala Harris promised to be a

"realistic," "practical" president for all Americans if elected.

For the bond market, expectations that rate cuts are coming

have kept U.S. Treasury prices supported and not giving back

their safe-haven gains from early August.

Following the Powell speech, the yield on benchmark U.S.

10-year notes was down 5.7 basis points at 3.805%,

from 3.862% late on Thursday. The 2-year note yield,

which typically moves in step with interest rate expectations,

fell 6.7 basis points to 3.9427%, from 4.01% late on Thursday.

Its German equivalent was steady at 2.224%.

The low U.S. yields have hurt the dollar, which has lost

ground on almost all major peers in August.

The euro was last at $1.1115, steady on the day

and just off a 13-month peak hit earlier this week, and sterling

was up 0.24% at $1.3125, battling to push through its

July 2023 level, which would take it to its highest in well over

two years.

The Japanese yen strengthened, with the dollar down 0.8% at

145.16 after Bank of Japan Governor Ueda's comments on

rates.

"The yen buying today is understandable given Governor Ueda

showed very little sign of a shift in the views and plans of the

BoJ following the financial market turmoil earlier this month,"

said Derek Halpenny, head of research global markets EMEA at

MUFG, in a note to clients.

Data out early in the day showed Japan's core inflation

accelerated for a third straight month, but a slowdown in

demand-drive price gains suggest no urgency for any immediate

rate hikes.

Oil gained but was still set to end the week lower as

swelling U.S. crude stocks and a weakening demand outlook in

China have led to pessimism. U.S. crude gained 2.1% to

$74.54 a barrel and Brent rose to $78.63 per barrel, up

1.83% on the day.

Gold prices added 1.16% to $2,512.06 an ounce,

recharging towards the record high of $2,531.6 hit just on

Tuesday.