GLOBAL MARKETS-World stocks up as investors eye ECB rate cut

(Updates prices) * ECB seen easing on Thursday, Canada may cut on Wednesday * Treasury yields drop after surprisingly soft US ISM survey * Oil drops after OPEC+ cuts, European gas prices surge on outage By Koh Gui Qing and Yoruk Bahceli NEW YORK/LONDON June 3 (Reuters) - World stocks rose on Monday despite a subdued Wall Street following unexpected weakness in U.S. manufacturing data, feeding uncertainty about the U.S. interest rate outlook as the euro zone prepared for a rate cut on Thursday. By early evening in New York, the MSCI All Country World Price Index .MIWD00000PUS added 0.41%. U.S. stocks alternated between gains and losses, amid a reported technical glitch on the New York Stock Exchange regarding "Limit Up-Limit Down" bands that sent dozen of stocks listed on the exchange into volatility pauses. The exchange said it was investigating the problem and will provide information as soon as possible. The S&P 500 index .SPX edged up 0.1%, the Dow Jones Industrial Average .DJI shed 0.3%, and the Nasdaq Composite .IXIC rose 0.6%. The pan-European STOXX index .STOXX was up 0.32%. Benchmark U.S. Treasury yields fell to a two-week low and the dollar tumbled after data showed U.S. manufacturing activity slowed for a second straight month in May. New goods orders dropped by the most in nearly two years. The soft data supported speculation the Federal Reserve might cut rates this year, although some investors remained skeptical, since inflation remains above the Fed's 2% target. In Europe, investors expect the European Central Bank on Thursday to cut the benchmark rate by 25 basis points to 3.75%. "We see inflation limiting how much central banks can cut interest rates," Jean Boivin, the head of Blackrock Investment Institute, said. "We see them keeping rates high for longer." Benchmark 10-year note yields US10YT=RR were lost as much as 11 basis points at 4.4021%, and got as low as 4.404%, the lowest since May 16. Two-year note yields US2YT=RR fell 7 basis points to 4.823% and reached 4.816%, also the lowest since May 21. The ECB is considered almost certain to trim rates on Thursday, yet after last week's surprisingly strong euro zone inflation data, markets now price in fewer than 60 basis points of easing. EUESTECBF=ICAP "There's a relatively positive risk tone to start the week, which seems like a continuation of the positive momentum seen on Friday, albeit it is somewhat surprising given the bumper calendar of event risk coming up," said Michael Brown, strategist at broker Pepperstone in London. China's factory activity in May grew at the fastest pace in about two years, data showed on Monday. That extended optimism in markets following Friday figures showing the Fed's preferred measure of inflation held steady in April. "The ECB decision is perhaps the most important event to watch, particularly after last week’s inflation data which raises the hawkish risk that there is only one more cut this year after a 25 bp reduction on Thursday," Brown said. Markets imply around an 80% chance the Bank of Canada will cut rates at its meeting on Wednesday and around 60 basis points of easing this year, though analysts hope the easing will be greater. 0#BOCWATCH ASIAN STRENGTH The dollar fell to a three-week low after the weak U.S. manufacturing data. The dollar index, a measure of the U.S. currency's value versus six major currencies, slipped 0.48% to 104.09 =USD . The greenback also fell to a two-week low against the yen following the data and was last down 0.6% at 156.245 JPY=EBS . The euro EUR=EBS rose 0.5% against the dollar to $1.0901. In other currencies, the Mexican peso weakened after the ruling party declared Claudia Sheinbaum winner of the presidential election by a "large margin". The U.S. dollar was last up 4.1% at 17.70 pesos MXN= . India's rupee INR= strengthened and its stock market .NSEI rose to a record high, buoyed by expectations of sustained economic growth as Prime Minister Narendra Modi looked set for a third term. Gold was up 1% at $2,350.17 an ounce XAU= , having now rallied for four months in a row, helped in part by buying from central banks and China. GOL/ Oil prices slumped a day after OPEC+ made a complicated decision on output that some analysts described as incrementally bearish for oil prices. O/R Brent LCOc1 tumbled 3.61% to $78.18 a barrel, while U.S. crude CLc1 dropped 3.78% to $74.08 per barrel. European natural gas prices TRNLTTFMc1 rose more than 8% to their highest this year at over 37 euros/ MWh as an outage in Norway, which overtook Russia in 2022 as Europe's biggest gas supplier, pushed exports sharply lower. ($1 = 157.1900 yen) <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Asia stock markets https://tmsnrt.rs/2zpUAr4 Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Yoruk Bahceli and Wayne Cole; Editing by Andrew Heavens, Andrea Ricci and David Gregorio) (([email protected]; 612 9171 7144; Reuters Messaging: [email protected])) ((To read Reuters Markets and Finance news, click on https://www.reuters.com/finance/markets For the state of play of Asian stock markets please click on: 0#.INDEXA ))