GLOBAL MARKETS-Stocks rally on expected Fed rate cuts; euro on defensive

* Global bond rally continues; Treasury yield hits 32
month-low
* Major Wall St indexes at record highs on rising rate cut
hopes
* Trade subdued, U.S. financial markets closed for holiday
* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Tomo Uetake
TOKYO, July 4 (Reuters) - Asian stocks advanced on Thursday,
tracking solid gains on Wall Street as data pointed to slowing
economic growth in the United States, bolstering the prospect of
rate cuts by the Federal Reserve as soon as this month.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS rose 0.3%, while Japan's Nikkei .N225 and
Australian benchmark .AXJO were up 0.3% and 0.5%,
respectively, although a U.S. public holiday kept activity
somewhat subdued.
On Wall Street, which closed at midday on Wednesday for the
eve of Independence Day, all three major stock indexes finished
at record closing highs as expectations of Fed policy easing
grew. .N
A report by a payrolls processor ADP showed U.S. companies
added jobs in June, but fewer than what analysts had forecast,
raising concerns the labour market is softening even as the
current U.S. economic expansion marked a record run last month.

"Stocks and bonds rallied together as the markets were
betting on interest rate cuts at the European Central Bank and
the U.S. Federal Reserve," said Noriko Miyoshi, head of fixed
income at Simplex Asset Management in Tokyo.
"The pace looks too fast. Investors across the world rushed
to take part in the game of yield hunting," she said.
Global sovereign bonds rallied overnight. The 10-year
Treasury note yield plunged to 1.939% US10YT=RR , a level last
seen following Donald Trump's election as president in November
2016.
Most 10-year euro zone bond yields NL10YT=RR , AT10YT=RR ,
ES10YT=RR , PT10YT=RR slid to record lows on Wednesday as
investors bet the ECB's dovish stance would continue, while the
10-year German Bund yield fell to minus 0.399% DE10YT=RR ,
flirting with the ECB's minus 0.40 deposit rate.
European Union leaders' nomination of Christine Lagarde, the
head of the International Monetary Fund, to replace Mario Draghi
as president of the ECB reinforced expectations of more monetary
policy easing if it's needed. The 10-year Italian bond yield hit 1.599% IT10YT=RR , its
lowest since October 2016 as the government eases its budget
ambitions. The market's next focus is on Friday's U.S. non-farm
payrolls for June, which economists expect to have risen by
160,000 in June, compared with 75,000 in May.
Mainland Chinese shares drifted into negative territory amid
U.S.-China trade uncertainty and a Trump comment over alleged
currency manipulation, with the Shanghai Composite .SSEC down
0.2% and the blue-chip CSI 300 .CSI300 dropping 0.3%. Hong
Kong's Hang Seng .HSI edged 0.1% higher.
The U.S. Commerce Department said on Wednesday it was
reviewing license requests from U.S. companies seeking to export
products to China's Huawei Technologies HWT.UL "under the
highest national security scrutiny" since the company is still
blacklisted. Top representatives from the United States and China will
meet in the coming week to continue trade talks between the
world's largest economies, White House economic adviser Larry
Kudlow said on Wednesday.
In a Wednesday tweet, Trump repeated his call for the United
States to match China and Europe's "big currency manipulation
game" and pumping money into their economies. In the foreign exchange market, the euro traded at $1.1285
EUR= , near its two-week low of $1.1268 set the previous day.
The dollar was little changed at 107.76 yen JPY= , losing
steam as the fall this week in U.S. bond yields.
The British pound stood at 1.2584 GBP=D4 , having hit a
two-week low of $1.2557 as economic data reinforced expectations
that the Bank of England would join its central bank
counterparts in cutting interest rates to shore up a worsening
economic outlook. In commodities, oil prices inched lower on Thursday after
solid gains the day before, pressured by data showing a
smaller-than-expected decline in U.S. crude stockpiles. O/R
Front-month Brent crude futures LCOc1 , the international
benchmark for oil prices, were down 0.7% at $63.40 per barrel,
while U.S. West Texas Intermediate (WTI) crude futures CLc1
were down 0.6% at $56.98 per.
Gold prices were steady XAU= on Thursday after hitting a
one-week high in the previous session, as gains in stock markets
offset support from a weaker dollar and U.S. rate cut hopes.
GOL

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Bets on bold first rate-cut from the Fed png https://tmsnrt.rs/2XTkkpn
Euro zone yields https://tmsnrt.rs/2FKutOn
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