Wall Street set to resume record run after Fed rate cut

• European stocks and U.S. futures higher after Fed cut
• Dollar clings to gains, analysts see more weakness though
• French bond yields briefly rise above lower-rated Italy's

LONDON, Sept 18 (Reuters) - Wall Street futures and the dollar nudged higher on Thursday after the Federal Reserve's first interest rate cut of the year, while French politics kept its markets jittery and the pound held its ground after UK rates were left unchanged.

The Fed's quarter-point cut and steady-as-she-goes message helped Europe's stocks .STOXX climb nearly 1% and had Wall Street ESc1NQc1 set for another round of record highs, despite Wednesday's somewhat hesitant reaction from traders. .N

Asia had rallied overnight too. Chinese stocks hit a 10-year high as local chipmakers cheered reports of U.S. giant Nvidia being banned there, while South Korea .KS11, Taiwan .TWII and Japan's Nikkei .N225 all ended more than 1% higher.

U.S. and China's Presidents Donald Trump and Xi Jinping are also due to speak on Friday and there was probably an element of relief too that the dollar was holding up after it hit a 3-1/2-year low this week - something that has left those that export to the U.S. grinding their teeth.

The Fed's closely watched "dot plot" had pointed to two more rate cuts over its remaining two meetings this year, but only one additional reduction in 2026.

Fed Chair Jerome Powell had also tempered expectations, saying the central bank did not need to move quickly from here, although analysts acknowledge that could easily change.

"We try to look through one or two days' volatility for the underlying trends," RBC Capital Markets' Richard Cochinos said. "In this instance, we continue to expect a weaker U.S. dollar," pointing to expectations of U.S. rates dropping to 3% next year.

Europe's traders had pared back some of the dollar's gains. The euro EUR=EBS was broadly steady at $1.1825 as was sterling GBP=D3 at just over $1.36 as the Bank of England kept UK rates at 4% as expected.

There was slightly more interest in its 7-2 vote to slow the annual pace at which it unloads the UK government bonds that it purchased during the financial and COVID crises, to 70 billion pounds from 100 billion pounds.

It was largely in line with a Reuters poll, but gilt markets have become jittery about UK government finances again this year and a key budget now looms in late November.

TD Securities' James Rossiter said the bond reduction had come as no surprise while he now expected another 25-bps interest rate cut just before that budget in November.

FRENCH FOCUS

Wall Street futures were helped by a 30% leap in chipmaker Intel's shares INTC.O in premarket trading on news Nvidia NVDA.O was investing $5 billion in the struggling firm.

Bond markets were started to splutter, with the yield on benchmark 10-year Treasury notes US10YT=RR - which moves inversely to price - little changed to 4.08% and the two-year yield US2YT=RR at 3.53%.

Germany's 10-year yield DE10YT=RR, the benchmark for the euro zone bloc, also stalled at 2.69%, though focus was also on France's political strains again as its bond yields briefly shifted above Italy's. GVD/EUR

Hundreds of thousands took part in anti-austerity protests across France on Thursday, unions said, urging President Emmanuel Macron and his new Prime Minister Sebastien Lecornu to acknowledge their anger and scrap looming budget cuts.

Back in currency markets, The Chinese yuan CNH= had ticked higher after its central bank left the borrowing cost of its seven-day reverse repurchase agreements unchanged overnight, while New Zealand's dollar NZD= tumbled after data there showed the economy shrinking far more than expected.

The high-flying Norwegian crown also softened a touch after its central bank trimmed rates by another 25 basis points, although it remained close to a near three-year high against the dollar NOK= and two-month high against the euro EURNOK=.

The Australian dollar AUD= also slipped from an almost one-year high after weaker-than-expected labour market data.

Oil prices had overcome an early dip in the commodity markets though to push Brent crude LCOc1 up 0.4% to $68.25 per barrel. Safe-haven gold XAU= also nudged 0.3% higher to $3,670 per ounce. GOL/O/R

European shares buoyed by Fed cut, Wall St futures higher