NEW YORK/LONDON, Sept 8 (Reuters) - MSCI's global equities gauge was higher on Monday while U.S. Treasury yields declined and the dollar fell on the prospects of lower interest rates and currency trading was active around the world as investors grappled with political uncertainty in countries from Japan and Indonesia to France and Argentina.
A heavy election defeat for Argentina President Javier Milei's ruling party in Buenos Aires province sent the Argentine peso to a record low.
In afternoon trading the peso was down 3% against the dollar, while the benchmark stock index .MERV, opens new tab fell 12% and an index of Argentine stocks traded on US exchanges .BKAR, opens new tab lost more than 17%. Some of the country's international bonds saw their biggest falls since they began trading in 2020 after a $65 billion restructuring deal.
Japanese Prime Minister Shigeru Ishiba resigned on Sunday, ushering in a potentially lengthy period of uncertainty at a shaky moment for the world's fourth-largest economy, prompting the yen to fall against the dollar.
France's fourth prime minister in less than two years, François Bayrou, lost a confidence vote on Monday, and parliament the government in the euro zone's second-largest economy over its plans to tame the ballooning national debt, deepening a political crisis.
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And in Indonesia, stocks gave up early gains to finish lower, while the rupiah rose, after Finance Minister Sri Mulyani Indrawati was ousted in a cabinet shake-up.
U.S. investors were focused on the prospects for easier monetary policy however, after Friday's weaker than expected U.S. labor data for August appeared to seal the case for a Federal Reserve interest rate cut this month.
"We had a pretty disappointing employment report on Friday. This week, it's all about inflation," said Ameriprise chief market strategist Anthony Saglimbene.
"Markets are kind of looking past some of the weaker economic data because it likely means that the Fed is going to have more space to cut interest rates this year."
On Wall Street at 02:38 p.m. the Dow Jones Industrial Average (.DJI), opens new tab was up 47.55 points, or 0.10%, to 45,448.58, the S&P 500 (.SPX), opens new tab had risen 11.92 points, or 0.18%, to 6,493.52 and the Nasdaq Composite (.IXIC), opens new tab was 112.04 points higher, or 0.52%, at 21,812.43.
MSCI's gauge of stocks across the globe (.MIWD00000PUS), opens new tab had climbed 3.37 points, or 0.35%, to 959.08. Earlier the pan-European STOXX 600 (.STOXX), opens new tab index closed up 0.52%.
"The weakening dollar against most currencies is boosting returns in foreign stock indices," said Gene Goldman, Chief Investment Officer at Cetera Investment Management in the U.S.
"There are country-by-country concerns. But a lot of news in France is priced in and Japan's prime minister could be replaced by a much more dovish, market-friendly prime minister."
US STOCKS SLIGHTLY HIGHER
In currencies, the U.S. dollar extended Friday losses after the jobs report reinforced rate cut expectations, while the yen fell broadly after Japan's political news.
The dollar index , which measures the greenback against a basket of currencies including the yen and euro, fell 0.37% to 97.51, with the euro up 0.31% at $1.1753. Against the Japanese yen , the dollar strengthened 0.13% to 147.57.
Against the Swiss franc , the dollar weakened 0.56% to 0.794, while sterling strengthened 0.28% to $1.3544. The Mexican peso had risen 0.35% versus the dollar at 18.657.
In U.S. Treasuries, the prospect of a cut and optimism that U.S. inflation data due later in the week would be benign also pushed down U.S. Treasury yields for the fourth straight day, to their lowest level since April.
The yield on benchmark U.S. 10-year notes fell 3.7 basis points to 4.049%, from 4.086% late on Friday while the 30-year bond yield fell 8 basis points to 4.6931% from 4.774%.
The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 1 basis point to 3.497%, from 3.507% late on Friday.
Oil prices regained some of last week's losses, after OPEC+'s output hike was seen as modest and due to concerns over the possibility of more sanctions on Russian crude.
U.S. crude settled up 0.63% or 39 cents at $62.26 a barrel and Brent ended at $66.02 per barrel, a rise of 0.79% or 52 cents on the day.
Gold surged past $3,600 an ounce for the first time on Monday, as the soft U.S. labor data reinforced expectations that the Fed would cut interest rates.
Spot gold rose 1.33% to $3,634.09 an ounce. U.S. gold futures rose 0.77% to $3,641.00 an ounce.
Reporting by Sinéad Carew, Rodrigo Campos in New York, Ankur Banerjee in Singapore and Alun John in London; Editing by Helen Popper, Kirsten Donovan, Kevin Liffey abd Ken Ferris
