GLOBAL MARKETS-Stocks hit record highs; Treasury yields fall after US data

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US stocks higher

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Japanese stocks, yen extend gains after Takaichi's election victory

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Treasury yields down and dollar dips

(Updates with early US markets activity)

By Caroline Valetkevitch and Alun John

NEW YORK/LONDON, Feb 10 (Reuters) - Major stock indexes mostly rose on Tuesday, with a world equity index and the Dow Jones industrial average hitting record highs, while Treasury yields fell after U.S. data suggested the economy may be softening. The Commerce Department said retail sales were unchanged in December, below a forecast ?by economists polled by Reuters for a rise of 0.4%, and below the unrevised 0.6% increase in November. Some investors say weaker data could allow the Federal Reserve more cushion ?to cut interest rates. Earlier, the Nikkei 225 hit a fresh peak again in the wake of Prime Minister Sanae Takaichi's ?decisive weekend election victory in Japan. The yen also strengthened further following the election. The dollar traded mostly ?lower against major currencies following the ?U.S. data and as U.S. Commerce Secretary Howard Lutnick said he views the weaker dollar to be at a "more natural" level to promote U.S. exports and expand economic growth. On ?Wall Street, investors digested the economic news and the latest quarterly results ?from companies. Shares of Marriott International (MAR) rose more than 8% after fourth-quarter results. "Yields are moving lower. That and the combination of earnings... is what is causing this enthusiasm and some momentum buying" in stocks, said Peter Cardillo, ?chief market economist at Spartan Capital Securities in New York. Key this ?week will be ?the January U.S. employment report on Wednesday, he said. The Dow Jones Industrial Average rose 301.92 points, or 0.60%, to 50,437.56, the S&P 500 rose 12.10 points, or 0.18%, to 6,977.10 and the Nasdaq Composite rose 26.58 points, or 0.11%, ?to 23,265.04. MSCI's gauge of stocks across the globe rose 4.02 points, or 0.38%, to 1,057.99, and hit a record earlier. The pan-European STOXX 600 index fell 0.07%.

While tech stocks around the world, especially software names, sold off last week on fears they could be upended by artificial intelligence tools, they have since found something of a footing.

The Nikkei jumped 2.3%, rising for a third consecutive day. Japanese stocks had been expected to benefit from a Takaichi victory given her plans for fiscal stimulus. But more surprisingly, Japanese government bonds ?and the ?yen, which had been expected to suffer, have rallied this week, seemingly on hopes that political stability and the stimulus will boost growth and drive investor optimism. Against the Japanese yen, the dollar weakened 1.09% to 154.17. The dollar index, which measures ?the greenback against a basket of currencies including the yen and the euro, fell 0.18% to 96.78, with the euro down 0.1% at $1.1901. The yield on the benchmark U.S. 10-year Treasury note fell 5.3 basis points to 4.145%, on track for its fourth straight day of declines. The yield has dropped more than 13 basis points over that timeframe, its biggest four-day drop since mid-October.

White House economic adviser Kevin Hassett said on Monday job gains could be lower in the coming months as the Trump administration's immigration policies slow labour growth and new AI tools boost productivity. Other areas of recent market ?stress were calmer on Tuesday. British government bonds slightly outperformed peers, having lost ground on Monday as Prime Minister Keir Starmer came under increasing pressure. In commodities markets, spot gold fell 0.66% to $5,031.18 an ounce. U.S. crude fell 0.68% to $63.92 a barrel and Brent fell to $68.74 per barrel, down 0.43% on the day.

(Reporting by Alun John ?and Dhara Ranasignhe in London, Gregor Stuart Hunter in Singapre, and Stella Qiu in Sydney; Editing by Sam Holmes, Kevin Liffey and Chizu Nomiyama)