By Marc Jones

LONDON, Sept 19 (Reuters) -A wave of risk appetite swept global financial markets higher from stocks and the dollar to gold and oil on Thursday, after the U.S. Federal Reserve kicked off its long-awaited interest rate cutting cycle with a half point move.

Europe was waiting to see if the Bank of England delivers a surprise cut of its own later. That is seen as only an outside chance, so for the time being the bulls were content with the first Fed cut in four years.

The cut, and the prospect of more before the end of the year, pushed MSCI's 47-country world stocks index .MIWD00000PUS close to a record high. Wall Street futures ESc1 were up after the S&P 500 hit its own all-time peak overnight .N, and Europe also opened strongly. .EU

In currency markets, the dollar .DXY overcame its initial post-Fed dip. /FRX London's gold bugs basked XAU= in bullion's latest highs, and oil LCOc1 and the industrial metals complex were stronger on the view that lower rates equals stronger demand. O/R

"The Fed delivered a very dovish rate cut. This bodes well for risk assets," Brown Brothers Harriman Senior Markets Strategist Elias Haddad said, adding that this was likely to keep the pressure on the dollar.

The U.S. central bank lowered its benchmark policy rate by 50 basis points to 4.75%-5%. It also dramatically cut the median 'dot plot' profile on where its rate setters expect rates to be in future, though Fed chief Jerome Powell emphasised prudence.

"I do not think that anyone should look at this and say, oh, this is the new pace," Powell told reporters after the half point cut was announced.

"We're recalibrating policy down over time to a more neutral level. And we're moving at the pace that we think is appropriate, given developments in the economy."

In Europe, the dollar was well off recent lows hit against the euro EUR=EBS, at $1.1127, and steady around 142.70 yen, after climbing as high as 143.95 JPY=EBS.

Bond markets were recalibrating too after their recent busy spell. Ten-year Treasury yields US10YT=RR were at just under 3.7% compared with 4.7% back in April, while Europe's benchmark - the 10-year German Bund DE10YT=RR - was at 2.2%, a 1-1/2 week high. GVD/EUR

BANK OF ENGLAND

It wasn't all about the Fed. Norway's central bank held its rates at a 16-year high but signalled it might cut them next year, while a Bank of England decision was due at 1100 GMT.

Sticky UK services inflation data on Wednesday has seen traders temper their bets that the BoE might trim the UK's 5% interest rate again, although they are still pricing a near 20% possibility. 0#BOEWATCH

In Asia overnight, the bulls drove Japan's Nikkei .N225 up 2.1% and stock markets in Australia .AXJO and Indonesia .JSKE to record highs. .T

Expectations that the People's Bank of China will also ease its policy on Friday helped too. Chinese bond yields dipped again, the yuan CNY=CFXS hit a 16-month peak of 7.0640 against the dollar, and Hong Kong's Hang Seng .HSI jumped over 2%. .SS

One dampener was South Korea returning from a holiday with heavy selling in chipmakers, after a downbeat Morgan Stanley note that halved SK Hynix's target price. SK Hynix shares 000660.KS tumbled 6% and Samsung 005930.KS fell 1.6%.

No such worries for commodity markets. Oil prices were up over 1%, with benchmark Brent crude futures LCOc1 climbing back above $74 a barrel for the first time in over a week and U.S. crude at $71.50. O/R

Bellwether global industrial metals copper CMCU3, aluminum CMAL3 and nickel CMNI3 all rose 1-1.4%. MET/L

The Bank of Japan will round out a bonanza week for interest rate decisions on Friday. It is not expected to do anything this meeting but in stark contrast to the broader global trend it could line up another rate hike for as soon as October.

Additional reporting by Tom Westbrook in Singapore; Editing by Mark Potter

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