San Francisco Frontiers - Stocks, gold steady amid political upheaval

French shares edged back up while the euro held losses as President Emmanuel Macron called on outgoing Prime Minister Sebastien Lecornu to salvage his administration.

Lecornu, who resigned Monday after under a month in the post, was tasked with gaining cross-party support for a cabinet lineup to pull France out of political deadlock.

London and Frankfurt both rose in midday deals.

Gold hit a fresh peak of $3,977.44 an ounce Tuesday, before slightly paring gains, as investors eyed the US government shutdown, with Republicans and Democrats appearing no closer to an agreement.

Bets on the Federal Reserve cutting interest rates this month and the political crisis in France are adding to the allure of the safe-haven asset.

"The rally in gold is part of the 'debasement' trade," said Kathleen Brooks, research director at trading group XTB.

"This trading theme is driving demand for alternative assets such as gold and crypto, as the dollar faces a long-term decline and fiscal concerns continue to rise around the world," she added.

In Asia, Tokyo eked out another record following the weekend election of a pro-stimulus advocate to lead Japan's ruling party, before paring gains to close flat.

Hong Kong and Shanghai were closed for holidays.

The election of Sanae Takaichi -- expected to become Japan's prime minister this month -- ramped up optimism that she will kick-start the economy through stimulus measures.

That sent the Nikkei 225 soaring almost five percent Monday and hammered the yen as investors began questioning the likelihood that the Bank of Japan will continue its interest rate hikes.

Takaichi's victory "removes uncertainty about the country's policy direction", said Saxo Markets' chief investment strategist, Charu Chanana.

"Her agenda is expected to continue a blend of fiscal support and ultra-easy monetary policy," she added.

Yields on 30-year Japanese bonds hit their highest level, reflecting fears the country's already colossal debt will balloon further.

A series of AI-related deals has fuelled optimism for tech stocks, driving several global markets to fresh highs this year.

The latest was an announcement on Monday by Advanced Micro Devices and OpenAI of a partnership to develop AI data centres, which led the S&P 500 and Nasdaq to surge to fresh records in New York.

While there are growing worries that huge investments in AI by firms have gone too far, OpenAI's Fidji Simo told AFP she did not consider it a bubble.

"I see that as a new normal, and I think the world is going to really switch to realising that computing power is the most strategic resource," said Simo, chief operating officer of OpenAI's applications, including its flagship model ChatGPT.

- Key figures at around 1045 GMT -

London - FTSE 100: UP 0.1 percent at 9,486.53 points

Paris - CAC 40: UP 0.3 percent at 7,997.84

Frankfurt - DAX: UP 0.2 percent at 24,423.68

Tokyo - Nikkei 225: FLAT at 47,950.88 (close)

Hong Kong - Hang Seng Index: Closed for a holiday

Shanghai - Composite: Closed for a holiday

New York - Dow: DOWN 0.1 percent at 46,694.97 (close)

Euro/dollar: DOWN at $1.1674 from $1.1713 on Monday

Pound/dollar: DOWN at $1.3439 from $1.3485

Dollar/yen: UP at 150.75 yen from 150.24 yen

Euro/pound: UP at 86.87 pence from 86.86 pence

Brent North Sea Crude: DOWN 0.2 percent at $65.38 per barrel

West Texas Intermediate: DOWN 0.2 percent at $61.60 per barrel

S.Hall--SFF