Updates to early U.S. trade

By Stephen Culp

NEW YORK, Oct 16 (Reuters) - Wall Street stocks advanced and gold prices surged ever upward on Thursday as solid corporate earnings helped investors look past simmering trade tensions between the United States and China.

All three major U.S. stock indexes followed their European counterparts to modest gains, while safe-haven seekers continued to send gold to fresh highs.

Chipmaker TSMC 2230.TW posted record profit and hiked its full-year guidance, stoking the fervor surrounding artificial intelligence and easing concerns over an AI bubble.

"AI continues to come up with new alliances, good earnings releases ... and there’s no reason for investors to change their mind on the outlook of technology," said Sam Stovall, chief investment strategist of CFRA Research in New York. "At the same time, we had much better than expected results from the large U.S. banks, implying that the economy looks pretty resilient."

Even so, signs of a dampening labor market are causing policymakers to lean in the direction of an interest rate cut this month. Federal Reserve Governor Christopher Waller said on Thursday that "based on all the data we have ... I believe that (the Fed) should reduce the policy rate another 25 basis points" at the conclusion of this month's monetary policy meeting on October 29.

Financial markets are currently pricing in a 94.6% likelihood of an October rate cut, according to CME's FedWatch tool.

Investors were eying the latest developments in the escalating U.S.-China trade dispute. Top U.S. trade officials condemned China's expansion of crucial rare earth exports, while Beijing accused Washington of stoking global panic over supply chain disruption.

Trade uncertainty is one driver helping to launch gold prices to all-time highs, according to Stovall.

"Because of the trade tensions, a lot of central banks, global central banks are buying gold and that is being helped by lower interest rates as well as the weakening U.S. dollar," Stovall added. "It’s not a reaction to worries about the global economy, but rather political uncertainty."

The Dow Jones Industrial Average .DJI rose 151.90 points, or 0.33%, to 46,405.32, the S&P 500 .SPX rose 37.12 points, or 0.55%, to 6,707.93 and the Nasdaq Composite .IXIC rose 212.34 points, or 0.94%, to 22,882.42.

European stocks advanced as investors took largely upbeat corporate earnings to heart amid easing political tensions after French Prime Minister Sebastien Lecornu survived a confidence vote.

MSCI's gauge of stocks across the globe .MIWD00000PUS rose 6.48 points, or 0.66%, to 991.90.

The pan-European STOXX 600 .STOXX index rose 0.45%, while Europe's broad FTSEurofirst 300 index .FTEU3 rose 10.02 points, or 0.44%

Emerging market stocks .MSCIEF rose 13.43 points, or 0.98%, to 1,379.12. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS closed higher by 0.92%, to 714.93, while Japan's Nikkei .N225 rose 605.07 points, or 1.27%, to 48,277.74.

The dollar edged lower against the euro and the yen as tariff jitters and dovish comments from Federal Reserve officials weighed on sentiment.

The dollar index =USD, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.17% to 98.50, with the euro EUR= up 0.2% at $1.1669.

Against the Japanese yen JPY=, the dollar weakened 0.11% to 150.88.

The yield on benchmark U.S. 10-year notes US10YT=RR fell 0.3 basis points to 4.042%, from 4.045% late on Wednesday.

The 30-year bond US30YT=RR yield fell 0.1 basis points to 4.6378% from 4.639% late on Wednesday.

The 2-year note US2YT=RR yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 0.5 basis points to 3.501%, from 3.506% late on Wednesday.

Oil prices steadied after U.S. President Donald Trump said India's Prime Minister Narendra Modi pledged to halt Russian oil imports.

U.S. crude CLc1 rose 0.02% to $58.28 a barrel and Brent LCOc1 fell to $61.89 per barrel, down 0.03% on the day.

Gold continued to benefit from trade tensions and the U.S. government shutdown as investors flocked to the safe-haven metal.

Spot gold XAU= rose 1.24% to $4,259.80 an ounce. U.S. gold futures GCc1 rose 1.75% to $4,250.00 an ounce.

(Reporting by Stephen Culp; Additional reporting by Marc Jones in London and Kevin Buckland in Tokyo; Editing by Nick Zieminski)

((stephen.culp@thomsonreuters.com))