By Amanda Cooper and Pete Schroeder

LONDON/WASHINGTON, Sept 13 (Reuters) -U.S. stocks opened higher on Friday and gold hit a record high after an overnight upheaval in investor expectations for a supersized Federal Reserve interest rate cut next week.

Stocks, Treasury prices and commodities all rallied after traders raised the chances of a half-point cut from the Fed next week to 41%, from closer to 14% a day ago, before articles in the Financial Times and Wall Street Journal each called the decision "a close call".

In early trading, all three major U.S. indexes were higher. The Dow Jones Industrial Average .DJI rose 0.36%, the S&P 500 .SPX gained 0.26%, and the Nasdaq Composite .IXIC climbed 0.16%.

Hopes for a bigger cut were further boosted when influential former New York Fed President Bill Dudley said at a forum in Singapore "there's a strong case for 50."

Beyond the scale of Wednesday's anticipated rate cut, the language coming out of the Fed's policy statement and future projections will provide even more fodder for market expectations.

"The decision to cut between 25bp vs 50bp could be closer than most people anticipate. In our view, the dot plot will be the most prominent part of the Fed's guidance next week, along with Chair Powell's post-meeting press conference. Our expectation for the Fed's forward guidance is for it to lean broadly dovish," analysts for TD Securities wrote in a note.

The dollar dropped as much as 1.0% to 140.36 yen JPY=EBS, its weakest since Dec. 28. It was last down 0.83% at 140.61.

The yen has also been supported this week by hawkish comments from Bank of Japan officials, with policy board member Naoki Tamura saying on Thursday he was "worried that upside inflation risk was heightening."

The dollar index =USD, which measures the currency against the yen and five other major rivals, dropped to a one-week trough at 101.00.

Benchmark 10-year Treasuries US10YT=RR rallied, pushing yields down 2.1 basis points to 3.659%, while rate-sensitive two-year yields US2YT=RR dropped 6.8 bps to 3.5803%.

GOLD AND OIL CONTINUE CLIMB

Global shares .MIWD00000PUS rose for a fifth day, up 0.45%.

Gold XAU= headed for its strongest weekly gain since mid-August, up 0.82% to a record high of $2,579.61 an ounce, driven by dollar weakness and looming rate cuts.

Crude oil continued to climb after surging and was up 0.78% to $69.51 a barrel early Friday, as producers assessed the impact on output after Hurricane Francine tore through the Gulf of Mexico.

Additional reporting by Kevin Buckland in Tokyo; Editing by Shri Navaratnam, Kim Coghill, Timothy Heritage, Alex Richardson and Jonathan Oatis

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