GLOBAL MARKETS-Stocks gain, dollar sags as Fed chief shores up rate cut prospects

* European stocks snap four-day loosing streak
* U.S. futures point to stronger open
* Fed chairman's remarks revive some bets on aggressive rate
cut
* Dollar and U.S. Treasury yields sag after Powell's
comments
* Oil hits six-week highs a Gulf of Mexico faces storm
* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Karin Strohecker
LONDON, July 11 (Reuters) - World stocks rose, global bond
yields fell and the dollar weakened after Federal Reserve
Chairman Jerome Powell bolstered expectations the Fed would cut
U.S. interest rates soon.
The pan-European STOXX 600 .STOXX climbed 0.2% after
losing 1.4% over the past four sessions. Germany's DAX futures
FDXc1 rose and Britain's FTSE futures FFIc1 gained 0.3%. The
oil and gas sector .SXPP as well as defensive stocks led the
gains. .EU LIVE/
In his first day of testimony before Congress on Wednesday,
Powell confirmed the U.S. economy was still under threat from
disappointing factory activity, tame inflation and a simmering
trade war, and said the Fed stood ready to "act as appropriate".

"Powell's statement confirmed we are going in the direction
of a cutting cycle," said Charles Zerah, a fund manager at
Carmignac. "The main question now is, are investors pricing too
much in terms of rate cuts by year end? The way you see equity
markets behaving, risk is that what markets are pricing could
lead to disappointment."
The Europe gains follow healthy rises in Asia, where MSCI's
broadest index of Asia-Pacific shares ex-Japan .MIAPJ0000PUS
rose 1%. Japan's Nikkei .N225 added 0.5%.
U.S. futures pointed to a stronger opening for Wall Street
as well with E-Minis for the S&P500 ESc1 at 0.2%.
U.S. stocks ended higher on Wednesday and the S&P 500 .SPX
briefly crossed 3,000 points for the first time following
Powell's remarks. .N
Some questioned how much momentum there was behind the
latest rally.
"We are in the camp and have been all year, and arguably
wrongly, that the Fed becoming more dovish and cutting rates is
not good for risk assets," said Neil Dwane, global strategist
and portfolio manager at Allianz Global Investors. Nine of 12
Fed rate cutting cycles had not stopped a recession, he noted.
"Given we are in the longest expansion and have only had
rates lifted to 2.5%, for me it begs the question, is a soft
landing possible?"
A strong June U.S. jobs report earlier this month heightened
expectations the Fed was more likely to cut by 25 basis points
than by 50. But Powell's cautious stance helped fuel bets on
heftier easing at its next policy meeting on July 30-31.
The chance of a 50 bps cut rose to 27.6% from 3.3% on
Tuesday, according to CME Group's FedWatch tool.
Minutes from the Fed's last meeting, in mid-June, however,
showed some policymakers felt there was not yet a strong case
for easing. The rate cut prospects also weighed on the dollar. The
dollar index .DXY against a basket of six major currencies
slipped 0.2% to 96.929, extending losses for a second straight
session after reaching a three-week peak on Tuesday.
The dollar was down 0.4% at 108.03 yen JPY= , forced off a
six-week high of 108.990 the previous day. It was still some
distance from a six-month trough of 106.780 set on June 25. The
euro EUR= nudged up 0.23% to $1.1275.
In fixed-income markets, the 10-year U.S. Treasury yield
US10YT=RR fell to 2.037% after dropping on Wednesday from a
three-week high of 2.113%.
Euro zone government bond yields also fell. Germany's
10-year government bond yield dropped to minus 0.32% DE10YT=RR
on expectations that monetary easing in the euro zone will not
be far behind the Fed.
In commodities, U.S. crude oil futures CLc1 climbed to a
six-week high as oil rigs in the Gulf of Mexico were evacuated
before a storm, while an incident with a British tanker in the
Middle East highlighted ongoing tensions in the region. O/R
U.S. crude oil futures gained 42 cents to trade at $60.84
per barrel. Brent crude LCOc1 futures rose 47 cents to $67.48.
Spot gold XAU= gained to $1,426 an ounce, its highest
since July 3, on the reinforced expectations for a Fed rate cut.
GOL/

(Reporting Karin Strohecker; additional reporting by Sujata Rao
and Marc Jones in London, Shinichi Saoshiro in Tokyo; editing by
Larry King)