GLOBAL MARKET - NEW YORK/LONDON, Feb 22 (Reuters) - Nvidia's stunning AI-related results sparked a worldwide wave of record highs in equity markets on Thursday, including the first new peak for Japan's Nikkei since 1989, while bond yields mostly rose as economic data kept immediate hopes of interest rate cuts at bay.
The benchmark S&P 500 index .SPX and Dow Jones Industrial Average on Wall Street, along with Europe's pan-regional STOXX 600 index .STOXX, also hit fresh record highs as Nvidia'sNVDA.O shares surged 15.4% and lifted artificial intelligence-related chip stocks around the world.
National bourses in Frankfurt .GDAXI and Paris .FCHI also set fresh highs, while Chinese stocks overnight extended their winning streak to eight straight sessions.
Nvidia on Wednesday forecast a roughly three-fold jump in first-quarter revenue and beat expectations for fourth-quarter revenue on strong demand for its AI chips. Nvdia added $250 billion in stock market value, on track for the biggest one-day gain in a company's market capitalization in history.
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Artificial intelligence provides the means to boost productivity that economies have struggled to increase for two decades, said Thomas Hayes, chairman and managing member of Great Hill Capital LLC in New York.
"What Nvidia represents is the catalyst for the roaring '20s in terms of productivity enhancement moving forward and as productivity increases, it keeps a lid on inflation," he said.
MSCI's gauge of stocks across the globe .MIWD00000PUS rallied 1.68%, while the pan-European STOXX 600 index .STOXX closed up 0.82%.
On Wall Street, the Dow Jones Industrial Average .DJI rose 1.1%, the S&P 500 .SPX advanced 2.09% and the Nasdaq Composite .IXIC climbed 2.96%, its biggest single-day gain in 12 months.
The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, indicating job growth likely remains solid in February and will reduce the urgency for the Federal Reserve to start cutting interest rates.
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The dollar index pared some losses after earlier hitting a three-week low as investors awaited new data for insight into when the Fed is likely to begin cutting interest rates.
The dollar index =USD was down 0.01%, with the euro EUR= rising 0.02% to $1.0819.
The Nikkei has jumped nearly 17% already this year, with the S&P 500 and Nasdaq rallying about 7% and 8%, respectively, driven in large part by the expectations for AI. Nvidia is at the center of that boom.
Thursday's record-setting charge included Tokyo Electron 8035.T jumping 6%, chip-testing equipment maker Advantest 6857.T surging 7.5% and another chip-related share, Screen Holdings 7735.T, rallying more than 10%.
"It has taken the Nikkei roughly 34 years to get to this record high but it is all being driven by strong earnings upgrades," said Absolute Strategy's global equities analyst Nick Nelson.
There was a big difference from the last time the Nikkei peaked during its bubble, Nelson said. When the Nikkei set the all-time high in 1989, stocks were valued at almost four times what they are now, Nelson said.
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Euro zone yields drifted to multi-month highs as markets scaled back their bets on European Central Bank rate cuts to less than 100 bps this year after Fed minutes on Wednesday showed policymakers were concerned about moving too early.
The latest ECB minutes showed its rate-setters were sticking with patience while new PMI data showed the downturn in euro zone business activity eased in February.
The two-year US2YT=RR U.S. Treasury yield, which typically moves in step with interest rate expectations, was up 5.9 basis points at 4.712%.
The yield on 10-year Treasury notes US10YT=RR was up 0.2 basis points to 4.325% as longer-duration bonds were flat.
While the bulk of Fed policymakers said they were concerned about the risks of cutting too soon, according to its meeting minutes, there was still broad uncertainty about how long borrowing costs should remain at their current lofty level.
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That reinforced the view among traders that any rate cut is not imminent, with market pricing suggesting one-in-three odds for a first reduction in May, according to CME Group's FedWatch Tool.
Oil prices steadied as a big rise in U.S. crude inventories offset the supportive impact of another attack on shipping near Yemen.
U.S. crude CLc1 rose 70 cents to settle at $78.61 a barrel, and Brent LCOc1 settled up 64 cents at $83.6 a barrel.
Gold prices fell from a near two-week high after jobless claims data indicated a strong U.S. economy, while investors awaited further economic data for guidance on the Fed's interest rate stance.
U.S. gold futures GCcv1 settled 0.2% lower to $2030.70 an ounce.
By Herbert Lash and Marc Jones
(Reporting by Herbert Lash, additional reporting by Marc Jones in London; Editing by Angus MacSwan and Will Dunham)
