GLOBAL MARKETS-Stocks upbeat as prospect of Fed easing outweighs political uncertainty

By Rae Wee

SINGAPORE, Sept 9 (Reuters) - Asia stocks rose on Tuesday, buoyed by expectations of a U.S. rate cut as early as next week, even as political upheavals around the world kept currency and bond investors on edge.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS climbed 0.7%, taking its cue from Wall Street's positive lead overnight that saw the Nasdaq index .IXIC notch a record-high close.

Nasdaq futures NQc1 were last up 0.06%, while S&P 500 futures ESc1 similarly ticked up 0.05%.

European futures, meanwhile, eased after regional benchmark indexes clocked gains in the cash session on Monday.

EUROSTOXX 50 futures STXEc1 fell 0.2%, while FTSE futures FFIc1 and DAX futures FDXc1 dipped 0.13% and 0.26%, respectively.

Breathing new life into the equities rally were expectations that the Federal Reserve would ease rates when it meets next week, following Friday's weak U.S. jobs report.

While consumer and producer price inflation data are due in the week ahead, investors are betting that a 25-basis-point cut this month is a done deal, with focus now on whether the Fed could deliver a larger 50bp move.

The U.S. Labor Department will also report a preliminary revision estimate to the employment level for the 12 months through March later in the day.

"Both publications are poised to influence the central bank's pace down the monetary policy stairs," said Jose Torres, senior economist at Interactive Brokers, referring to the PPI and CPI figures.

"A heavy subtraction from the worker roster alongside a downside miss on the CPI is likely to raise the odds of a half-percent to a coin flip."

Markets are now pricing in an over 11% chance the Fed could lower rates by 50bp this month, compared to zero a week ago, according to the CME FedWatch tool.

Elsewhere, Japan's Nikkei .N225 climbed past the key 44,000 mark for the first time, aided by a weaker yen and following the resignation of the country's Prime Minister Shigeru Ishiba, a fiscal hawk.

U.S. tariffs on Japanese goods including cars and auto parts are set to be lowered by September 16, Japan's tariff negotiator Ryosei Akazawa said in an X post on Tuesday.

Hong Kong's Hang Seng Index .HSI rose 0.5%, while China's CSI300 blue-chip index .CSI300 shed 0.7%.

POLITICAL TURMOIL

Renewed uncertainty over the political landscape across various economies has rattled currency and bond markets in the past few sessions.

From Ishiba's resignation in Japan, French lawmakers voting to oust Prime Minister Francois Bayrou, a heavy election defeat for Argentina President Javier Milei's ruling party in local elections, to the abrupt replacement of Indonesia's finance minister, investors had lots to consider.

Still, losses across currencies were capped by a broadly weaker dollar, while most bond markets have since largely held steady.

The yen JPY=EBS was last 0.3% stronger at 147.05 per dollar, clawing back its losses from the previous session, while the euro EUR=EBS steadied at $1.1772.

Yields on Japanese government bonds fell on Tuesday, after rising in the previous session. Bond yields move inversely to prices. JP/

"While global political risks bear monitoring, the market is currently positioned for a potential Fed rate cut, with equities rallying and bond yields responding mainly to U.S. data surprises," said Shier Lee Lim, lead FX and macro strategist for APAC at Convera.

The two-year U.S. Treasury yield US2YT=RR, which typically reflects near-term rate expectations, languished near a five-month low at 3.5005%.

The benchmark 10-year yield US10YT=RR was similarly pinned near a five-month trough and last stood at 4.0512%. US/

In commodities, oil prices gained on Tuesday after OPEC+ decided to increase production by less than what market participants had anticipated.

Brent crude futures LCOc1 were up 0.73% at $66.50 per barrel, while U.S. crude CLc1 rose 0.72% to $62.71 a barrel. O/R

Spot gold XAU= touched a fresh record high of $3,656.92 an ounce, buoyed by expectations of imminent Fed cuts. GOL/