(Updates to midday US trading)

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Global stocks rally after Fed signals cuts

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Dollar and Treasury yields fall

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Oil rebounds

By Lawrence Delevingne

Aug 23 (Reuters) - World shares gained on Friday, just

shy of all-time highs, while the dollar languished around

one-year lows after a speech by the world's most powerful

central banker confirmed the U.S. would soon begin interest rate

cuts.

U.S. Federal Reserve Chair Jerome Powell, in a speech on

Friday at the annual economic symposium in Jackson Hole,

Wyoming, said "the time has come" to cut interest rates as

rising risks to the job market left no room for further weakness

and inflation was in reach of the Fed's 2% target, offering an

explicit endorsement of an imminent policy easing.

"Powell gave the market just enough dovishness to support

the market while avoiding the potential pitfall of inducing

fear," Carl Ludwigson, Managing Director at Bel Air Investment

Advisors, said in an email.

On Wall Street, the Dow Jones Industrial Average rose

0.73%, to 41,011, the S&P 500 gained 0.65%, to 5,606 and

the Nasdaq Composite gained 0.9%, to 17,778.

Europe's broad Stoxx 600 index rose 0.5% after

Asian shares outside Japan had nudged down 0.1%, but Japan's

Nikkei gained 0.4% as investors digested inflation data

and remarks from Bank of Japan Governor Kazuo Ueda flagging a

willingness to raise interest rates if the economy and inflation

turn out as forecast.

That left MSCI's all country world index up

about 1%, and with early August's turmoil in the rear view

mirror, it is now trading near its mid-July all-time peak.

Markets are fully priced for a 25 bp U.S. rate cut in

September and see a cut at each of the Fed's three remaining

meetings this year, and for one to be a larger 50 bp move.

On the final night of the four-day Democratic National

Convention, Vice President Kamala Harris promised to be a

"realistic," "practical" president for all Americans if elected.

U.S. Treasury yields fell across the board on Friday after

Powell's remarks.

The yield on benchmark U.S. 10-year notes fell

5.4 basis points to 3.808%, from 3.862% late on Thursday. The

2-year note yield, which typically moves in step with

interest rate expectations, fell 8 basis points to 3.928%, from

4.01% late on Thursday.

Its German equivalent was steady at 2.229%.

The dollar turned lower and sterling rose to its highest in

more than two years on Friday.

The euro gained to $1.1179, up 0.6% on the day,

hitting a one-year high.

The Japanese yen strengthened, with the dollar down 0.93% at

144.92 after Bank of Japan Governor Ueda's comments on

rates.

"The yen buying today is understandable given Governor Ueda

showed very little sign of a shift in the views and plans of the

BoJ following the financial market turmoil earlier this month,"

said Derek Halpenny, head of research global markets EMEA at

MUFG, in a note to clients.

Data out early in the day showed Japan's core inflation

accelerated for a third straight month, but a slowdown in

demand-drive price gains suggest no urgency for any immediate

rate hikes.

Oil prices jumped, rebounding after losses earlier in the

week on swelling U.S. crude stocks and a weakening demand

outlook in China. U.S. crude gained 2.31% to $74.7 a

barrel and Brent rose to $78.87 per barrel, up 2.14% on

the day.

Gold prices added about 1% to $2,508 an ounce,

recharging towards the record high of $2,513 hit just on

Tuesday.