GLOBAL MARKETS-Fed rate-cut sign boosts stocks, dollar and yields drop

* MSCI world index surges, S&P 500 hits record high
* Gold hits roughly six-year peak
* U.S. 10-year Treasury yield falls below 2%
* Oil prices jump on Iran tensions, Fed

(Updates with closing of U.S. markets)
By Lewis Krauskopf
NEW YORK, June 20 (Reuters) - World stock markets jumped on
Thursday, with the U.S. benchmark S&P 500 hitting a record high,
while the 10-year U.S. Treasury yield fell below 2% as investors
digested a signal from the Federal Reserve of potential U.S.
interest rate cuts as soon as its next meeting.
The dollar weakened after the Fed, the U.S. central bank, on
Wednesday indicated a marked shift in sentiment even as it left
its benchmark rate unchanged for now. Gold prices
soared to near six-year highs.
“I do think that today's move is due to yesterday's Fed
move," said James Ragan, director of wealth management research
at D.A. Davidson.
"The Fed was certainly more dovish then they were earlier in
the year and it seems pretty likely that they are going to cut
the rate at the July meeting."
Oil prices surged, with an extra boost from news that Iran
shot down a U.S. military drone, raising fears of a military
confrontation between Tehran and Washington. MSCI's gauge of stocks across the globe .MIWD00000PUS
gained 1.10%. The index hit its highest since May 1.
On Wall Street, the Dow Jones Industrial Average .DJI rose
249.17 points, or 0.94%, to 26,753.17, the S&P 500 .SPX gained
27.72 points, or 0.95%, to 2,954.18 and the Nasdaq Composite
.IXIC added 64.02 points, or 0.8%, to 8,051.34.
Shares of Slack Technologies Inc WORK.N , the fast-growing
workplace messaging and communication platform, surged 48.5% in
their debut. Oracle ORCL.N shares rose 8.2% after
the company forecast current-quarter profit above estimates.

The pan-European STOXX 600 index .STOXX rose 0.36%,
reaching its highest since early May. Bank of England officials voted unanimously to hold interest
rates despite some recent suggestions from policymakers that
borrowing costs should go up. The BoE cut its economic growth
forecast for Britain to zero in the second quarter. Focus also is turning to next week's G20 meeting for any
developments between the United States and China regarding their
trade war that has raised concerns about global growth.
“There have been two drivers of the market gains this month:
The expectations for the Fed to get more dovish; and optimism
over the potential for some type of trade progress with China,"
Ragan said.
Government bond yields in the United States and Europe fell
following the Fed's decision, with the U.S. 10-year note yield
dropping below 2% for the first time in 2-1/2 years.
Benchmark 10-year U.S. notes US10YT=RR last rose 5/32 in
price to yield 2.0112%, from 2.027% late on Wednesday, after
falling to 1.974% earlier in the session.
The dollar index .DXY , which measures the greenback
against a basket of currencies, fell 0.48%, with the euro EUR=
up 0.58% to $1.1289. Spot gold XAU= added 2.2% to $1,389.58 an ounce.
Lower interest rates decrease the opportunity cost of
holding non-yielding bullion and weigh on the dollar, making
gold cheaper for investors holding other currencies.
U.S. crude CLcv1 settled up 5.4% at $56.65 and Brent
LCOcv1 settled at $64.45, up 4.3%.
"It's a confluence of events: there's a looming easing cycle
which is going to hit the dollar and prop up commodity prices
and there are also the tensions with Iran," said John Kilduff, a
partner at Again Capital Management in New York.

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