Updates prices at 11 a.m. ET/1500 GMT

By Isla Binnie

NEW YORK, Sept 19 (Reuters) -U.S. stock indexes sailed higher in the wake of their global counterparts and the dollar wobbled on Thursday after the Federal Reserve started a long-awaited interest rate cutting cycle with a chunky half-point move.

The U.S. central bank gave a boost to risk assets on Wednesday with a larger-than-usual cut to borrowing costs, a forecast they would fall further, and a message that the world's biggest economy was not facing a slowdown.

Megacap tech stocks including Microsoft MSFT.O and Apple AAPL.O led the rally on Wall Street. Smaller companies, which might be expected to enjoy reduced operating costs and cheaper debt in a lower rates environment, also felt the benefit.

The tech-heavy Nasdaq Composite .IXIC climbed 2.39%, to 17,994.07.

The blue-chip Dow Jones Industrial Average .DJI rose 0.97%, to 41,903.85. The benchmark S&P 500 .SPX hit another intraday high and was last seen up 1.54%, to 5,704.89.

The Russell 2000 small-cap index .RUT rose as much as 2%.

Jobless claims for the week ended Sept. 14 came in lower than the market expected, injecting optimism that the U.S. could be aiming for economists' ideal scenario of cooling inflation without triggering a recession.

"The claims came in low, so it's only going to help fuel the idea that a soft landing is in play," said Ross Mayfield, investment strategist at Baird.

"The guidance for plenty more cuts by the end of 2025 should open up (rate-sensitive) sectors to reengage and expand," Mayfield added.

U.S. Treasury yields also rose after the jobless claims report. US/

Buoyed by the prospect of more cuts from the Fed before the end of the year, MSCI's 47-country world stocks index .MIWD00000PUS rose 1.45%, to 838.30.

The Bank of England's decision to leave interest rates unchanged appeared not to dampen market spirits in Europe, with the STOXX 600 .STOXX index last up more than 1%. Sterling GBP= strengthened 0.29% against the dollar to $1.325.

CURRENCIES, COMMODITIES

In currency markets, the dollar edged slightly lower in choppy trading. The dollar index =USD, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.14% to 100.88. /FRX

Gold was up XAU= while oil LCOc1 and the industrial metals complex were stronger on the view that lower rates equal stronger demand. O/R

Oil prices rose more than 1% but bearish concerns remained that the outsized interest rate cut pointed to a weakening labor market undermining the economy. Benchmark Brent crude futures LCOc1 climbed back above $74 a barrel for the first time in more than a week, and U.S. crude was at $71.41 a barrel. O/R

The bonanza week for interest rate decisions continues on Friday with the Bank of Japan. It is not expected to make a move now, but may buck the global trend and line up another rate hike for as soon as October.

Reporting by Isla Binnie in New York;
Additional reporting by Marc Jones in London; Editing by Will Dunham

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