Updates with U.S. closing levels

By Caroline Valetkevitch

NEW YORK, Oct 8 (Reuters) - Major stock indexes rose on Wednesday, with U.S. and European indexes hitting record highs, while gold extended its recent rally above $4,000 an ounce as a prolonged U.S. government shutdown and expectations of further U.S. interest rate cuts drove demand for the safe-haven asset.

Gold, traditionally seen as a store of value during times of instability, is up 54% year-to-date after gaining 27% in 2024. Spot gold XAU= was last up 1.36% at $4,037.90. U.S. gold futures GCv1 for December delivery settled 1.7% higher at $4,070.5. Silver XAG= also climbed to a record high.

Shares of gold miners also rose, including U.S.-listed shares of Gold Fields GFI.N, which ended 3.7% higher.

The Japanese yen reached its weakest level since mid-February against the dollar as investors worried about an increase in fiscal spending in Japan, while the euro eased on ongoing political uncertainty in France.

On Wall Street, stocks rebounded from Tuesday's declines, with the S&P 500 and Nasdaq registering all-time closing highs and technology shares .SPLRCT leading the way higher. Nvidia NVDA.O shares ended 2.2% higher.

"It comes down to investors have been optimistic since April, and that optimism continues to be expressed in spite of a government shutdown, a slowing employment market or any other red flags that would normally detract investors," said Oliver Pursche, senior vice president and advisor for Wealthspire Advisors in Westport, Connecticut.

Investors have been without most U.S. economic data as the federal government remains shut.

Minutes released Wednesday from the last Federal Reserve meeting showed a divided committee, in which policymakers were concerned about rising labor market risks but remained wary of inflation. The central bank is widely expected to cut rates by 25 basis points at its October 28-29 meeting, according to the CME Group’s FedWatch Tool.

The Dow Jones Industrial Average .DJI slipped 1.20 points to 46,601.78, the S&P 500 .SPX gained 39.13 points, or 0.58%, to 6,753.72 and the Nasdaq Composite .IXIC gained 255.02 points, or 1.12%, to 23,043.38.

European shares climbed to record highs, powered by strong gains in French and Spanish stocks. The pan-European STOXX 600 .STOXX was up 0.8%, closing at its highest level, while French stocks .FCHI jumped 1.1% and Spanish stocks .IBEX touched their highest mark since 2007.

French caretaker Prime Minister Sebastien Lecornu said a deal could eventually be reached on a 2026 budget despite the country's political crisis.

France's fifth prime minister in two years, Lecornu tendered his and his government's resignation on Monday, just hours after announcing the cabinet line-up, making it the shortest-lived administration in modern France.

The euro pared losses after Lecornu also said on Wednesday that President Emmanuel Macron could be in a position to nominate a new prime minister in the next 48 hours. The currency EUR= was last down 0.33% at $1.1616 and reached $1.1597, the lowest since August 27.

In Japan, the surprise election of Sanae Takaichi to lead the country's ruling Liberal Democratic Party on Saturday has dented the yen on expectations of greater government stimulus.

Against the yen JPY= the dollar was last up 0.53% at 152.7. It earlier reached 152.99, the highest since February 14, and has risen from 147.44 on Friday.

U.S. Treasury yields turned positive in afternoon trading after investors showed tepid demand at an auction of 10-year notes. The yield on the benchmark U.S. 10-year Treasury note US10YT-TWEB was up 0.6 basis points to 4.133%.

Oil prices rose. Traders expected a lack of progress on a Ukraine peace deal to keep sanctions in place against Moscow. U.S. crude CLc1 rose 82 cents to settle at $62.55 a barrel and Brent LCOc1 gained 80 cents to settle at $66.25.

(Additional reporting by Amanda Cooper and Joice Alves in London and Ankur Banerjee in Singapore; Editing by Emelia Sithole-Matarise, Alexandra Hudson, Diane Craft and Daniel Wallis)

((caroline.valetkevitch@thomsonreuters.com))