GLOBAL MARKETS-Stocks shine, Treasury yields rise as rate cut stokes risk appetite

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World stocks push higher after bumper Fed cut

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Fed move seems to point to soft landing

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Risk appetite weighs on Treasury bonds

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Graphic: World FX rates http://tmsnrt.rs/2egbfVh

By Isla Binnie

NEW YORK, Sept 19 (Reuters) - Wall Street indexes marched past previous record highs after global counterparts booked gains and longer-dated Treasury yields rose on Thursday as the start of the Federal Reserve's first interest rate cutting cycle in more than four years whet investors' risk appetite.

With a larger-than-usual move on Wednesday, the U.S. central bank turned the page on more than a year in which borrowing costs were kept at their highest for decades to try to temper inflation.

Fed Chair Jerome Powell said he did not see elevated risks of a slowdown, and policymakers projected the benchmark rate would fall again, reflected in a closely-watched tool known as a dot plot.

"The jumbo cut appears to have raised the perceived likelihood of a soft landing," said Jonathan Cohn, Head of U.S. Rates Desk Strategy at Nomura, referring to economists' ideal scenario where inflation cools without triggering a recession.

This was "supporting a sharp rally in risk assets, even as Powell's rhetoric and the dot plot pushed back on the prospect of additional 50bp cuts," Cohn said adding: "the market will continue to acclimate to the Fed's mixed messaging through tomorrow's light calendar."

Megacap tech stocks including Microsoft (MSFT) and Apple (AAPL) gained on Wall Street. Smaller companies, which might be expected to enjoy reduced operating costs and cheaper debt in a lower rates environment, also felt the benefit.

The tech-heavy Nasdaq Composite climbed 2.78%, to 18,061.59.

The blue-chip Dow Jones Industrial average rose 1.38%, to 42,076.78 and the benchmark S&P 500 rose 1.89%, to 5,724.42. Both hit intraday record highs.

The Russell 2000 small-cap index rose as much as 2%.

Gains were not limited to Wall Street. MSCI's 47-country world stocks index gained 1.78%, to 840.96.

Jobless claims for the week ended Sept. 14 came in lower than the market expected, with data showing the number of Americans filing new applications for unemployment benefits dropped to a four-month low.

This contributed to a sell-off in U.S. government debt that pushed up yields.

The benchmark 10-year Treasury yield hit its highest level in about two weeks at 3.768% and was last up 3.738%, from 3.687% late on Wednesday.

Shorter-dated debt yields felt pressure after another data report showed existing home sales fell to their lowest level since 2023. The 2-year note yield, fell 0.3 basis points to 3.6002%, from 3.603% late on Wednesday.

CURRENCIES, COMMODITIES

In currency markets, the dollar edged lower in choppy trading. The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.43% to 100.59.

The Bank of England's decision to leave interest rates unchanged did not dampen market spirits in Europe, with the STOXX 600 index last up more than 1%. Sterling strengthened 0.57% to $1.3285.

The bonanza week for interest rate decisions continues on Friday with the Bank of Japan. It is not expected to make a move now, but may buck the global trend and line up another rate hike for as soon as October.

The Japanese yen weakened 0.24% against the greenback to 142.63 per dollar in afternoon trading.

Gold rose 1.14% to $2,588.06 an ounce.

Oil prices rose, backed by the view that lower rates equal stronger demand.

Benchmark Brent crude futures climbed back above $74 a barrel for the first time in more than a week, and settled at $74.88, 1.67% higher on the day. U.S. crude settled 1.47% higher, at $71.95 a barrel.

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(Reporting by Isla Binnie in New York; Additional reporting by Marc Jones in London; Editing by Will Dunham)