Stocks set to end turbulent month higher as U.S. data sets stage for rate cut
Wall Street stocks gain after U.S. inflation data
European stocks touch record intraday high
Dollar heads for biggest monthly loss since November
Gold prices fall as U.S. dollar gains
Updates prices, adds U.S. market open, inflation and consumer spending data
By Chibuike Oguh and Naomi Rovnick
NEW YORK/LONDON Aug 30 (Reuters) -Global stocks rose on Friday, on track for the fourth consecutive month of gains despite a bout of heavy selling in early August, buoyed by U.S. economic data that has helped the dollar snap a weeks-long losing streak.
The U.S. personal consumption expenditures (PCE) price index - which is the Federal Reserve's preferred inflation measure - rose 0.2% in July, according to Commerce Department data released on Friday.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.5% last month, the report showed. The data sets the stage for the Fed to likely begin easing monetary policy from September.
Wall Street's main indexes were trading higher following the data.
The Dow Jones Industrial Average .DJI rose 0.16% to 41,402.02, the S&P 500 .SPX gained 0.58% to 5,624.22 and the Nasdaq Composite .IXIC gained 0.91% to 17,675.08.
Europe's Stoxx index .STOXX was up 0.21% after touching a record intraday high in the early session and Britain's FTSE 100 .FTSE was up 1.7% after rising to a three-month peak. MSCI's world share index .MIWD00000PUS ticked 0.53% higher, heading for a 2.16% monthly gain.
The stunning recovery from an early August sell-off reminiscent of October 1987's "Black Monday" came as traders priced a so-called Goldilocks scenario, in which the U.S. economy keeps growing but not so much to prevent interest rate cuts.
Money markets are confidently pricing the Fed's first 25 basis point cut of this cycle at its September meeting, with a 33% chance of a jumbo 50 bp reduction.
The U.S. economy grew faster than initially thought in the second quarter of this year because of strong consumer spending, and corporate profits, a report on Thursday showed.
Pictet Asset Management co-head of multi-asset Shaniel Ramjee warned, however, that the current pattern of stocks and bonds rallying in tandem was unlikely to hold.
"We're seeing a bond market that is pricing in a lot of accommodation and an equity market that is reasonably supported by growth," he said.
Government bond markets soared in early August after a weaker-than-expected U.S. jobs report and a surprise Bank of Japan rate hike wreaked chaos in currency carry trades and drove heavy selling of risky assets.
The yield on benchmark U.S. 10-year notes US10YT=RR rose 0.4 basis points to 3.871%. The 2-year note US2YT=RR yield, which typically moves in step with interest rate expectations, rose 2.8 basis points to 3.9206%.
EURO FLAT
The dollar =USD steadied near a one-week high versus major peers on Friday, on track to snap a five-week losing streak although still heading for around a 2.5% monthly loss.
Against the yen JPY=EBS, the dollar stood at 145.37, on track to lose more than 3% for the month, as pressure eased on the Japanese currency on the prospect of narrowing interest rate differentials.
Core inflation in Japan's capital Tokyo accelerated for a fourth straight month in August, data showed on Friday, with the 2.4% price increase signalling further BoJ rate hikes ahead.
The euro EUR=EBS was flat at $1.107, having declined on Thursday after softer-than-expected German inflation data increased bets on further European Central Bank rate cuts.
Elsewhere in markets, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.58%, set for a 2.14% monthly increase. Japan's Nikkei .N225, following its early month collapse, lost 1.16% for the month but rose 0.74% on Friday.
Oil prices fell. Brent crude futures for October delivery LCOc1 dropped 1.41% at $78.81 a barrel, while U.S. crude CLc1 lost 2.65% to $73.9 a barrel.
Gold prices weakened although set for a 2.8% monthly gain. Spot gold XAU= lost 0.2% to $2,515.89 an ounce. U.S. gold futures GCc1 fell 0.39% to $2,515.80 an ounce.GOL/
World FX rates YTD http://tmsnrt.rs/2egbfVh
Global asset performance http://tmsnrt.rs/2yaDPgn
Reporting by Chibuike Oguh in New York and Naomi Rovnick in London
To read Reuters Markets and Finance news, click on https://www.reuters.com/finance/markets For the state of play of Asian stock markets please click on: 0#.INDEXA
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