LONDON/SYDNEY  - Expectations of a resumption soon in U.S. interest rate cuts bolstered world stocks on Monday, with shares in Asia rising to multi-year highs.

However, European shares retreated as some of the enthusiasm following U.S. Federal Reserve chief Jerome

Powell's Jackson Hole speech faded and investors refocused on the broader economic picture.

London markets were closed for a holiday, thinning overall trading volumes in Europe.

Powell's dovish change of course has prompted futures to price in an 84% chance of a quarter-point rate cut in September, and at least 100 basis points of easing to 3.25-3.5% by the middle of next year.

"As an investor, you lose an enemy whenever the Federal Reserve pivots because it gives valuations room to become ever more expensive," said Florian Ielpo, Lombard Odier Investment Managers' head of multi-assets.

MSCI's broadest index of world shares rose 0.1% and held near Friday's record highs, while in Asia Chinese blue chips closed over 2% to its highest level since 2022, while Japan's Nikkei shut 0.4% higher.

The dollar ticked higher , flattering the outlook for corporate earnings, although increased rate-cut bets also imply policymakers now see more danger of a downturn in employment and the economy.

Euro zone bond yields rose, reversing their fall from late Friday as traders reassessed that Fed-driven move and its impact on Europe.

U.S. cash treasuries did not trade in London on Monday due to the bank holiday.

Looking at inventory data for manufacturers, wholesalers and retailers, Lombard Odier's Ielpo said that, while manufacturers had stocked up amid tariff announcements, further down the economic food chain, retailers held little inventory.

Companies returning to replenish items from now will discover the true costs of U.S. tariffs, which will likely turn up in third quarter results, said Ielpo.

Market euphoria will also be tested by a reading on U.S. personal consumption prices on Friday that is expected to show core inflation creeping up to its highest since late 2023 at 2.9%.

Any upside surprise to inflation would also challenge the rally in longer-dated Treasuries, especially given that a whopping $183 billion in new debt is being sold this week.

The influential head of the New York Fed, John Williams, is due to speak later on Monday and markets will be keen to hear whether he shares Powell's outlook on policy.

NVIDIA WATCH

The pan-European STOXX 600 index was down 0.2%, dragged down by Europe's renewable stocks after the U.S. government ordered Denmark's Orsted to halt construction of an offshore wind project near Rhode Island.

The move, deepening woes for the industry and putting Orsted's plans to raise capital at risk, sent the company's share price down roughly a record 17%. Vestas Wind, EDP Renovaveis and Siemens Energy were all lower.

Shares in Amsterdam-listed JDE Peet's meanwhile surged 17% after Keurig Dr Pepper agreed a deal to buy the company for 15.7 billion euros, a 20% premium to Friday's closing price.

Focus is turning to Nvidia's results on Wednesday when it is forecast to announce a 48% rise in earnings per share on revenue of $45.9 billion for its second fiscal quarter.

U.S. S&P 500 and Nasdaq futures were down between 0.1% and 0.2%.

Analysts will be keen to hear more on the outlook for shipments to China and details of the deal with President Donald Trump to pay the U.S. government 15% of the revenue from sales of some advanced chips in the Asian giant.

Trump said on Friday that the U.S. would also purchase a 9.9% stake in Intel for $8.9 billion, or $20.47 per share, which represents a discount of about $4 from Intel's closing share price of $24.80.

In currency markets, the dollar gained around 0.25% to 147.24 yen after falling 1% on Friday. The euro ticked down 0.1% to $1.1705, having bounced from a trough of $1.1583 on Friday.

The European Central Bank is expected to hold rates unchanged in September, though sources told Reuters at the weekend that discussions about further cuts may resume in the autumn if the economy weakens.

Gold declined as the dollar strengthened and was last down 0.3% to $3,363 an ounce after jumping 1% late last week.

Oil prices were further supported by the lack of progress on talks between Russia and Ukraine, which keeps sanctions on Russian supplies.

Brent rose 20 cents to $67.92 a barrel, while U.S. crude added 25 cents to $63.91 per barrel.

(Reporting by Nell Mackenzie and Wayne Cole; Editing by Dhara Ranasinghe, Shri Navaratnam and Gareth Jones)