GLOBAL MARKETS-US 10-year yield surpasses 4% amid Fed rate path reassessment

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Strong US jobs growth dampens recession worries

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10-yr yield tops 4% for first time since early August

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Dollar eases after hitting seven-week high versus yen

(Updated at 10:28 a.m. ET/ 1428 GMT)

By Chuck Mikolajczak

NEW YORK, Oct 7 (Reuters) - A gauge of global stocks was little changed on Monday and U.S. Treasury yields climbed, with the benchmark 10-year note topping 4% as investors reassessed the path of interest rates from the Federal Reserve.

The U.S. 10-year note climbed to 4.03%, its highest since Aug. 1 and first time above 4% since Aug. 8 after Friday's stronger-than-expected U.S. payrolls report fueled expectations the Fed will dial back its aggressiveness in cutting interest rates.

On Wall Street, stocks were modestly lower, although 9 of the 11 major S&P sectors were in negative territory. Energy shares rose as crude prices continue to ascend on concerns a widening conflict in the Middle East could dent supply.

"(The) concerns that would keep people on the sidelines have to do with higher energy prices in the near term, (the) impact of that inflation and that yields which have been falling precipitously (have) now firmed up," said Art Hogan, chief market strategist at B Riley Wealth in New York.

The Dow Jones Industrial Average fell 134.09 points, or 0.32%, to 42,218.66, the S&P 500 fell 17.09 points, or 0.30%, to 5,733.98 and the Nasdaq Composite fell 57.61 points, or 0.32%, to 18,080.24.

MSCI's gauge of stocks across the globe rose 0.01 points, or 0.00%, to 847.41. In Europe, the STOXX 600 index rose 0.14%, erasing earlier declines.

Expectations for a Fed rate cut of 25 basis points (bps) at the central bank's November meeting stand at 88.2%, with the market pricing in an 11.8% chance it will hold rates steady, according to CME's FedWatch Tool.

Markets were completely pricing in a cut of at least 25 basis points just a week ago, with a 34.7% chance for another outsized 59 basis-point cut.

The yield on benchmark U.S. 10-year notes was last up 4.5 basis points to 4.026%. The 2-year note yield, which typically moves in step with interest rate expectations, rose 6.7 basis points to 3.999% after rising to 4.027%, its highest since Aug. 20.

A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at a positive 2.5 basis points after briefly inverting for the first time since Sept. 18.

Major U.S. economic data is not scheduled to be released until Thursday, when the consumer price index is issued. Fed Chair Jerome Powell and other Fed officials have commented recently that the central bank has shifted its focus from combating high inflation to labor market stability.

Several Fed officials are scheduled to speak this week, including Governor Michelle Bowman and Bank of Atlanta President Raphael Bostic on Monday.

Hezbollah rockets early on Monday hit Haifa, the third-largest city in Israel, which looked poised to expand its ground incursions into southern Lebanon on the first anniversary of the Gaza war.

U.S. crude rose 1.82% to $75.73 a barrel and Brent rose to $79.33 per barrel, up 1.64% on the day.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.05% to 102.48, with the euro down 0.01% at $1.0975.

Against the Japanese yen, the dollar weakened 0.38% to 148.14 after hitting a seven-week high of 149.13. Sterling weakened 0.3% to $1.3076.

The Bank of Japan said broadening wage hikes were underpinning consumption and prodding more firms in regional areas to pass on rising labor costs, signaling the economy was making progress towards meeting the prerequisite for more interest rate hikes.

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(Reporting by Chuck Mikolajczak; Additional reporting by Lisa Mattackal and Pranav Kashyap in Bengaluru; Editing by Hugh Lawson)