GLOBAL MARKETS-Heightened Fed cut expectations lift stocks, sterling choppy on UK budget surprise

By Chuck Mikolajczak

NEW YORK, Nov 26 (Reuters) - Global stocks advanced for a fourth straight day on Wednesday as expectations for a U.S. Federal Reserve rate cut remained intact, while sterling was whipsawed by Britain's fiscal watchdog inadvertently publishing new forecasts before a UK budget release.

On Wall Street, U.S. stocks were higher, led by gains in a tech .SPLRCT sector that gained nearly 1.5% in part due to a jump of nearly 7% in Dell Technologies DELL.N after its quarterly results and outlook.

Equities have rallied since Friday, when expectations for a December rate cut from the Federal Reserve jumped after New York Fed President John Williams said interest rates can fall in the near term even as other policymakers insisted borrowing costs should remain steady for now.

Those expectations were buttressed by comments this week from San Francisco Federal Reserve Bank President Mary Daly and Fed Governor Christopher Waller in support of a December cut.

Economic data on Wednesday showed weekly initial jobless claims dropped 6,000 to a seasonally adjusted 216,000 for the week ended November 22, the lowest level since April and below the 225,000 estimate of economists polled by Reuters.

"The economy isn't slipping into recession, but it's weak enough to allow the Fed another cut. There's still a high amount of people that are on unemployment, so this gives the Fed headroom to be able to cut some more," said Kim Forrest, chief investment officer at Bokeh Capital Partners.

The Dow Jones Industrial Average .DJI rose 423.32 points, or 0.90%, to 47,535.77, the S&P 500 .SPX rose 62.31 points, or 0.92%, to 6,828.06 and the Nasdaq Composite .IXIC rose 237.69 points, or 1.03%, to 23,262.34.

Expectations for a 25 basis point cut from the Fed stand at 84.9%, according to CME's FedWatch Tool, down slightly from the 85.2% in the prior session but well above the 30.1% from a week ago.

U.S. markets will be closed on Thursday for the Thanksgiving holiday and will have an abbreviated session on Friday.

MSCI's gauge of stocks across the globe .MIWD00000PUS jumped 10.93 points, or 1.10%, to 1,001.99, and was on pace for its fourth straight session of gains, its longest streak in a month. The MSCI index has gained 3.4% over the four-day rally, its biggest four-day percentage gain since mid-May.

The pan-European STOXX 600 .STOXX index closed up 1.09% to record its biggest daily percentage gain in two weeks.

The dollar index =USD, which measures the greenback against a basket of currencies, fell 0.26% to 99.60, with the euro EUR= up 0.21% at $1.1593.

Sterling GBP= strengthened 0.51% to $1.3232. The currency had swung between a gain of 0.54% and a decline of 0.34% on the day in the wake of the UK budget confusion as the Office for Budget Responsibility's Economic and Fiscal Outlook was released early.

British finance minister Rachel Reeves then announced a big tax-raising budget that will take more money from workers, people saving for a pension and from investors to give herself greater room to meet her deficit-reduction targets.

Ten-year gilt yields GB10YT=RR were last down 7 basis points at 4.426%.

The Japanese yen JPY= weakened 0.25% against the greenback to 156.47 per dollar even as sources told Reuters the Bank of Japan is preparing markets for a possible interest rate hike as soon as next month as it may take a more consistent rate hike path to alter the trajectory of the currency.

The yield on benchmark U.S. 10-year notes US10YT=RR shed 0.4 basis point to 3.998%.