GLOBAL MARKETS-Stocks rise as investors get respite from AI rout, focus on key US data

By Wayne Cole and Amanda Cooper

SYDNEY/LONDON, Feb 9 (Reuters) - Global equities rallied on Monday, taking heart from a rebound in U.S. chip stocks and other beaten-down assets after a volatile week, while Japanese Prime Minister Sanae Takaichi's resounding election win pushed Tokyo shares to a record high.

Bargain hunting in some of the markets that were hit by selling last week, like silver, bitcoin and technology stocks, helped shore up overall sentiment, as did heightened expectation for more policy easing from the Federal Reserve that, in turn, weighed on the dollar a little.

A rate cut by June is now seen as an odds-on bet, with a slew of economic data this week on jobs, inflation and spending expected to reinforce the case for stimulus. 0#USDIRPR

A Bloomberg News report, citing unnamed sources, that China had urged banks to curb U.S. Treasury exposure weighed a little further on the dollar and pushed Treasury yields a tad higher.

In stocks, Japan's Nikkei .N225 headlined the gains with a rise of 3.9%, hitting all-time highs as the decisive majority for the ruling LDP party clears the way for more spending and tax cuts.

The yen strengthened across the board, but most notably against the dollar, which had recovered almost all of a steep slide against the Japanese currency in late January.

"The key focus for investors will be the scale of fiscal expansion. In particular, developments around the temporary food tax cut pledged during the election campaign will be closely followed," Sree Kochugovindan, senior research economist at Aberdeen, said.

"The LDP landslide does not give Takaichi free rein to just spend. The LDP are fiscally conservative and Takaichi has been very mindful of bond investors," she said.

The prospect of more borrowing pushed two-year Japanese government bond yields up to their highest since 1996 at 1.3% JP2YTN=JBTC.

Equity investors took heart from the removal of some political uncertainty in Japan, coupled with a sense of relief over the apparent end to last week's aggressive selloff in both the companies that are spending hugely to roll out artificial intelligence, as well as in those that investors see as most vulnerable to disruption from it.

Europe's STOXX 600 index .STOXX rose 0.2% towards record highs, while S&P 500 futures ESc1 and Nasdaq futures NQc1 dipped modestly, down 0.2-0.3%. The indexes bounced more than 2% on Friday to break a run of heavy losses.

Concerns remained about whether the massive amounts being spent on AI will ever make a return. The four largest U.S. tech giants alone plan to spend $650 billion on capex this year.

US DATA TO TEST FED WAGERS

U.S. data this week could prove pivotal in setting expectations for monetary policy. Reports on jobs, inflation and consumer spending all land in the coming days and, in order to keep sentiment intact, they would need to be benign enough to keep rate cuts alive, but not so weak as to threaten consumer demand and earnings.

In currencies, the dollar eased against a basket of major currencies =USD, falling 0.45% against the yen JPY=EBS to 156.57, while the euro was up 0.5% at $1.1873 EUR=EBS.

The pound was under pressure against the euro, which rose 0.3% on the day, leaving the single currency at 87.05 pence, as uncertainty grew over the political survival of UK Prime Minister Keir Starmer.

"Should Starmer be replaced, gilt yields initially rise and the pound weakens," said Ruth Gregory, deputy chief UK economist at Capital Economics.

"The most likely longer-lasting influence is a loosening in fiscal policy that leads to higher gilt yields than otherwise and a weaker pound than otherwise."

In commodity markets, silver XAG= rose 3.4% to $80.58 an ounce, after swinging wildly from a 15% loss to a 9% closing gain on Friday, while gold rose 1.1% to $5,015, well above last week's low of $4,403.