*

Traders cut chances of even one rate reduction in 2025

*

S&P 500 futures edge down before US CPI and earnings data

*

Sterling under pressure as gilt yields rise again

*

Treasury yields near 14-month top, Fed easing scaled back

*

Oil jumps to four-month high as Russia supply crimped

(Updates European mid-morning prices)

By Amanda Cooper

LONDON, Jan 13 (Reuters) - Global stocks fell on Monday

while the dollar hit 26-month peaks after a U.S. jobs report

that prompted investors to question if interest rates will fall

at all this year.

A surge in energy prices has added to concern about steadily

rising inflation, with crude oil topping $80 a barrel on the

back of signs that Russian exports are falling as Washington has

stepped up sanctions on the country.

European natural gas prices have risen by 4% in the last

month alone following a cold snap and after Ukraine's decision

to halt supplies of Russian gas deliveries via pipeline.

Data also showed Chinese export growth gathered pace in

December while imports recovered as the world's second-largest

economy braces for mounting trade risks with the incoming U.S.

administration.

In Europe, equities fell for a second day, with the STOXX

600 losing 0.9% and Germany's DAX down 0.7%.

The FTSE 100 dipped by only 0.4%, supported by weakness

in the pound, which was once again in focus as UK

borrowing costs continued to rise.

Markets show traders have already scaled back expectations

for Federal Reserve rate cuts to only 25 basis points (bps) for

all of 2025, down from closer to 45 bps before Friday's jobs

data.

"After a very strong jobs report, we think the cutting cycle

is over," said Aditya Bhave, deputy chief U.S. economist at

BofA. "Inflation is stuck above target, with upside risks."

He said debate in the market could switch to when the Fed

might be likely to raise rates, particularly if the core

personal consumption expenditures index, which excludes food and

energy prices, were to move above 3% and market-based inflation

expectations picked up.

Yields on 10-year Treasuries traded around a

14-month peak of 4.79%.

Wednesday's consumer price index (CPI) report could move

markets more than usual, given how close investors are to ruling

out any rate cuts this year.

"As the weather warms up a bit, whether the deep freeze in

bond markets continues may be determined by how US CPI on

Wednesday materialises after Friday's blockbuster payrolls

report," said Deutsche Bank strategist Jim Reid.

Higher bond yields raise the discounting bar for corporate

earnings and make debt relatively more attractive in comparison

with equities, cash, property and commodities.

But they also raise borrowing costs for businesses and

consumers. Part of the increase in yields over the past few

weeks has been driven by an expectation that U.S.

President-elect Donald Trump's proposed tariffs will raise

import prices.

This could test optimism around corporate earnings as

first-quarter earnings season kicks off on Wednesday with the

major banks including Citigroup, Goldman Sachs and JPMorgan.

MORE LOSSES AHEAD

S&P 500 futures fell 0.8% and Nasdaq futures

dropped 1.2%, suggesting more losses ahead after Wall Street's

Friday slide .

In Asia, a holiday in Japan made for thin trading on Monday.

Chinese blue chips fell 0.3% as data showed

exports rose a surprisingly steep 10.7% and imports added 1%

last month, adding ammunition to those calling for harsh tariffs

on Chinese goods.

The 45 bps rise in Treasury yields in the past two months

has pushed the dollar to its highest against a basket of

currencies since November 2022.

Sterling has been particularly hard hit, down 4.4% in that

time. On Monday the pound was down 0.6% at $1.213, its weakest

since early November 2023.

The global selloff in bonds has battered the UK gilt market,

sending long-term yields to their highest since 1998

, with concerns mounting over increased government

borrowing to meet budget commitments.

British finance minister Rachel Reeves said on Saturday that

she would act to ensure the government's fiscal rules were met.

The euro was down 0.5% at $1.01955 after touching

its weakest since November 2022 at $1.0177.

The dollar eased by 0.3% against the yen to

157.245 but remained near six-month highs.

Oil prices rose sharply after a drop in Russia's seaborne

exports to their lowest since August 2023 fuelled supply

concerns even before the latest round of U.S. sanctions. Brent

crude futures were up 1.83% at $81.23 a barrel.