By Alden Bentley and Naomi Rovnick

NEW YORK/LONDON (Reuters) -U.S. shares joined a global rally on Friday, looking set to crown November with Wall Street’s biggest monthly gain in a year on post-election growth hopes, while the dollar tracked toward a weekly loss on prospects for firmer rates in Japan and easing in Europe.

U.S. trade was very thin the day after Thanksgiving. Many investors take the day off for a long weekend. Wall Street closes at 1:00 p.m. EST/1600 GMT and the Treasury markets close at 2:00 p.m. and most month end position adjustments were done before the holiday.

The S&P 500 rose 0.34% in early trade which if sustained would secure the best monthly gain since November 2023, while the Nasdaq Composite is heading for its best month since May if it’s 0.53% rise holds.

MSCI’s broad gauge of world stocks was 0.26%firmer, also looking like the best month since May.

Donald Trump’s Nov. 5 election victory and pledges of tax cuts, deregulation and import tariffs have supercharged investors’ expectations for U.S. and Wall Street stocks to keep outperforming other regions. U.S. tech shares are also benefiting from an artificial intelligence investing craze.

Speculation about Japanese rate hikes drove a rebound for the weakened yen, though it was poised for its biggest weekly gain vs the buck since July. The dollar was down 1.06% at 149.93 yen. It delved 149.53 yen overnight for the first time since Oct. 21 after Japan’s government finalised a stimulus budget and inflation in Tokyo came in hotter than economists expected.

The dollar index, which measures the currency against six major rivals, fell 0.05% to 106.02 and was also poised to end the week 1.4% lower thanks to a sudden rebound for the euro, which had been lurching towards the key $1 marker on tariff fears and a bleak euro zone outlook.

The outlook for lower U.S. rates has also weighed on the dollar, with futures traders placing odds that the Federal Reserve will cut rates another 25 basis points at December’s meeting at 65%. However, for 2025 they see less chance that the Fed will continue to bring rates down each meeting.

“The dollar is a little bit weaker. That’s helpful for the multinationals in the S&P 500,” said Quincy Krosby, chief global strategist, LPL Financial in Charlotte, North Carolina.

Trump has pledged immediate 25% tariffs on all products from Mexico and Canada when he takes office in January and an additional 10% on imports from China, a major trading partner for Asian economies and euro zone export powerhouse Germany.

“President-elect Trump has called out Canada, Mexico, and China for now, but Europe is not far down the list,” strategists at BCA Research said, recommending investors limit their exposure to European stocks and favour German government bonds.

The euro was down 0.04% at $1.0549. It has recovered from crushing losses since the Nov. 5 U.S. election to gain 1.2% so far this week, supported by data on Friday showing euro zone inflation had higher, limiting bets for deep European Central Bank rate cuts.

Europe’s STOXX share index rose 0.01%, while Europe’s broad FTSEurofirst 300 index rose 0.02%. Asian and emerging market stocks sustained the deepest blows from tariff fears.

Indonesian shares have dropped 5% during November in their worst month since September 2020 while South Korean shares have slumped 3.9% lower to mark a five-month losing streak, the longest since 2021.

France’s CAC 40 share index has been the worst performing major European market this month, down 2.3% as Michel Barnier’s fragile coalition government struggled to win support for its attempts to shrink the nation’s vast budget deficit.

Far-right leader Marine Le Pen, whose national rally won a strong share of vote in June’s snap elections, has this week ramped up threats to topple Barnier’s administration and sparked a rush out of French government debt.

France’s 10-year yield on Friday traded at around 2.8980%, having touched their highest over Germany’s since 2012 earlier in the week.

Traders have fully priced a 25-bps European Central Bank rate cut to 3% in December, although hawkish remarks from board member Isabel Schnabel this week dampened speculation about a 50 bps reduction.

The yield on the benchmark U.S. 10-year notes fell 4.4 basis points to 4.198%. Investors bought government bonds this week after Trump nominated hedge fund manager and Wall Street veteran Scott Bessent for Treasury Secretary, easing fears about excessive U.S. borrowing.

While Trump’s import tariffs could boost U.S. inflation, Federal Reserve officials have turned cautious on rate cuts, though markets still anticipate they will reduce the funds rate, currently 4.5%-4.75%, by a quarter-point next month.

U.S. crude rose 1.06% to $69.45 a barrel and Brent rose to $73.36 per barrel, up 0.11% on the day. Brent was under more pressure after the Israel-Hezbollah ceasefire deal in Lebanon eased supply fears, while gold rose 0.44% to $2,652.59 an ounce.

In cryptocurrencies, bitcoin gained 3.02% to $98,010.00.

(Reporting by Naomi Rovnick, additional reporting by Stella Qiu in Sydney and Ankur Banerjee in Singapore; editing by Mark Heinrich and David Evans)

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