Updates to U.S. market close

By Lawrence Delevingne and Nell Mackenzie

Aug 19 (Reuters) - Global stockspushed higher and the dollar tipped lower on Monday, after shares surged last week on expectations the U.S. economy would dodge a recession and cooling inflation would spurinterest rate cuts.

On Wall Street, stocksadded to their recent gains. The Dow Jones Industrial Average .DJI rose 0.58%, to 40,896, the S&P 500 .SPX gained 0.97%, to 5,608 and the Nasdaq Composite .IXIC gained 1.39%, to 17,876. MSCI's broadest index of world stocks jumped by around 1% .MIWD00000PUS.

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.

U.S. Federal Reserve members Mary Daly and Austan Goolsbee over the weekend flagged 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.

"We expect the chairman to convey on Friday that the Fed is likely to begin easing monetary policy next month, without fully committing to the size of the rate cut," TD Securities analysts wrote in a note on Monday.

Interest rate futures 0#FF: 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. FEDWATCH

Yields on U.S. government debt eased on Monday; the yield on benchmark 10-year notes US10YT=RR fell 1.9 basis points to 3.873%, from 3.892% late on Friday.

Analysts at Goldman Sachs shifted downtheir 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 in a note on Friday.

Broad European shares .STOXX moved about 0.6% higher, touching an over three-week high in broad-based market gains, while the blue-chip FTSE 100 index .FTSE traded up 0.55%.

Investors are anticipating flash Purchasing Managers' Index (PMI) data for Britain, France, Germany 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 .CSI300 closed about 0.3% higher.

DOLLAR DIP

In currency markets, thedollar fell to a seven-month low and the Japanese yen hit a more than one-week high as traders awaited the Fed's decision on interest rate cuts. The dollar lapsed 0.64% to 146.64 yen JPY=EBS while the euro firmed to $1.108 EUR=EBS, up about 0.5% and continuing its August climb. USD/

Even as markets have calmed, it is worth remembering that the economic fundamentals behind the global markets sell-off 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.

A softer dollar combined with lower bond yields could not hold gold at its zenith and it fell to around $2,505 an ounce XAU=, just down from its all-time peak of $2,509. GOL/

Oil prices dipped as concerns about Chinese demand continued to weigh on sentiment. O/R

U.S. crude CLc1 lost 2.9% to $74.42 a barrel and Brent LCOc1 fell to $77.79 per barrel, down 2.37% on the day.

Reporting by Lawrence Delevingne in Boston and Nell Mackenzie in London; Editing by Dhara Ranasinghe, Christopher Cushing, Ed Osmond, Giles Elgood, Alex Richardson, Barbara Lewis and Deepa Babington

To read Reuters Markets and Finance news, click on https://www.reuters.com/finance/markets