GLOBAL MARKETS-Stocks hold ground as markets eye Fed rate cut

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Global stocks flat, Wall Street fractionally firmer

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China stocks gain as Nov exports top forecasts

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Fed expected to deliver hawkish rate cut on Wednesday

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Rates set to stay on hold in Canada, Switzerland, Australia

(Updates after European markets open)

By Iain Withers and Wayne Cole

LONDON/SYDNEY, Dec 8 (Reuters) -

Stocks held their ground on Monday as markets bet that the Federal Reserve would deliver a rate cut this week, though investors speculated that the meeting could be one of the most fractious in recent memory.

Futures imply around an 86% chance of a quarter-point reduction in the funds rate, now 3.75% to 4.0%, so a steady decision would be a seismic shock. A Reuters poll of 108 analysts found only 19 expecting no change, and the rest a cut.

"Everyone is expecting the Fed cut now... but what's more important will be how many dissenters there will be," said Nabil Milali, portfolio manager at Edmond de Rothschild Asset Management.

"It could be one of the first meetings in history where the decision could be split seven for a cut and five members against it, and that will be a huge signal for next year's rate cut expectations."

The Federal Open Market Committee has not had three or more dissents at a meeting since 2019, and that has happened just nine times since 1990.

JPMorgan's head of U.S. economics Michael Feroli wrote in a note he expected at least two dissenters in favour of no action. Feroli also thinks the Fed will cut in January as insurance against a sustained weakening in the labour market, before going on a lengthy policy pause.

Central banks in Canada, Switzerland and Australia also meet this week and all are poised to hold steady. The Swiss National Bank might like to ease again to offset the strength of its franc, but is already at 0% and reluctant to go negative.

A run of hot economic data has led markets to abandon any hope of another easing from the Reserve Bank of Australia and even price in a rate hike for late 2026.

Hopes for more Fed stimulus have helped support equities in recent weeks, and both S&P 500 futures and Nasdaq futures were 0.1-0.2% firmer.

Earnings this week from Oracle and Broadcom will test the appetite for all things AI-related, while Costco will provide colour on consumer demand.

BONDS HAVE A LOT RIDING ON FED GUIDANCE

Global stocks were broadly flat on the day, after a subdued open for European stocks down about 0.1%.

Chinese blue chips gained nearly 1% as data showed the country's exports topped forecasts in November and stayed resilient in the face of U.S. tariffs.

Beijing's diplomatic spat with Tokyo worsened as a Chinese carrier strike group launched intense air operations near Japan over the weekend. Elsewhere in the region, Thailand launched air strikes along its disputed border with Cambodia.

In bond markets, longer-dated Treasuries have been under pressure given the risk of hawkish guidance from the Fed, even if it does agree on a cut this week.

There are also concerns President Donald Trump's attacks on Fed independence could lead to rates going too low and stoking inflation over the long run.

On Monday, 10-year yields gained about 2 basis points to 4.1468%, having climbed 9 basis points last week. The rise in yields had helped the dollar steady after two weeks of decline, though its index was off about 0.1% on the day at 98.912.

It gained 0.1% on the yen to 155.425, with markets increasingly confident the Bank of Japan will raise its rates at a policy meeting next week.

The euro was a shade firmer at $1.1654, just short of its recent seven-week high of $1.1682.

Commodities have been generally underpinned by wagers on more U.S. policy stimulus, with copper reaching all-time highs thanks to a mixture of supply concerns and demand from AI-related infrastructure investment.

Gold stood at $4,208 an ounce, after spiking as high as $4,259 on Friday, while silver was just off a lifetime peak.

Brent dipped 0.2% to $63.64 a barrel, while U.S. crude also fell 0.2% to $59.98 per barrel. (Reporting by Wayne Cole Editing by Saad Sayeed, Muralikumar Anantharaman, Peter Graff)