Global stocks down 3.4% for the month Google, Microsoft...

	  Global stocks down 3.4% for the month  

	  Google, Microsoft earnings signal Wall Street relief rally 

	  Japan's yet hits fresh 34-year low then rebounds sharply 

(Updates throughout)

Global stocks were teetering on Friday towards their worst month since September, although futures markets predicted strong tech earnings would spark a Wall Street relief rally later in the day and help traders recoup some losses.

Japan's yen was volatile, hitting a fresh 34-year low after the Bank of Japan (BOJ) kept monetary policy loose at its latest policy meeting, spiking briefly as traders speculated that Japanese authorities may intervene, then sliding again.

MSCI's broad index of global stocks .MIWD00000PUS was down 3.4% for the month, although 0.2% higher on the day.

World equities have faltered this month as hopes of rapid Federal Reserve rate cuts this year drained from the market following a series of hotter than expected U.S. inflation readings.

Still, contracts that wager on Wall Street's tech-heavy Nasdaq 100 NQc1 were almost 1% higher on Friday, while those on the benchmark S&P 500 index ESc1 rose 0.8%, after earnings from Alphabet GOOGL.O and Microsoft MSFT.O beat estimates.

These moves came ahead of a fresh reading on Friday of U.S. core personal consumption expenditures, the Fed's preferred inflation measure, which could further douse rate cut hopes and strengthen the dollar.

In a wild session for the yen on Friday, the Japanese currency JPY=EBS weakened as far as 156.82 per dollar, spiked suddenly to 154.97, then retreated again.

The Bank of Japan kept interest rates around zero at its policy meeting that concluded Friday, despite forecasting inflation of around 2% for three years.

Markets are on high alert for Tokyo authorities to intervene to prop up the currency, in what would be an unconventional and politically tough decision.

BOJ Governor Kazuo Ueda said on Friday that exchange-rate volatility could significantly impact the economy.

But this came after U.S. Treasury Secretary Janet Yellen told Reuters on Thursday that currency intervention was acceptable only in "rare" circumstances and that market forces should determine exchange rates.

The yen was trading about 40% below its fair value, Pictet Asset Management chief strategist Luca Paolini said.

"We underestimate the potential for something to go very wrong when you have a currency that is totally misaligned with (economic) fundamentals," he said.

"The sooner they hike rates, the better."

FED HOPES FADE Ahead of the U.S. inflation data the two-year Treasury yield US2YT=RR , which reflects short term interest rate expectations, hovered near 5% on Friday.

The benchmark 10-year yield US10YT=RR was down 2 basis points to 4.706%, still sharply up from its level of below 4.1% in early March. Bond yields rise as prices fall.

Traders now expect the Fed to lower its main funds rate, currently at a 23-year high of 5.25% to 5.5%, by just 36 basis points this year, with some fearing a further hike.

With the U.S. housing market, labour market and consumer spending strong, inflation could spike again instead of falling in a straight line towards the Fed's average 2% target, said Frederic Leroux, head of cross asset at fund manager Carmignac.

The central bank is "not willing to trigger a deep recession, so we will have more inflation but potentially also more growth," he said.

In Europe on Friday, the benchmark Stoxx 600 share index .STOXX rose 0.7%, still heading for a 1.4% monthly drop.

European government debt investors have also had a disappointing month, despite euro zone inflation having dropped close to the European Central Bank's 2% target.

Euro zone bond yields touched five month highs on Thursday before steadying on Friday. The two-year German bond yield DE2YT=RR , slipped 1 basis point to just above 3%. The ten-year bund yield fell 3 basis points to 2.62% DE10YT=RR

The ECB is expected to cut its deposit rate from a record 4% in June but analysts have queried how far it can diverge from U.S. monetary policy without weakening the euro significantly.

The euro EUR=EBS last traded at $1.072, 0.6% lower against the dollar this month

Elsewhere, Asian stocks outside Japan added 0.8% .MIAPJ0000PUS , Tokyo's Topix TOPX rose 0.9%, and Brent crude oil LCOc1 gained 0.6% to $89.53 a barrel.

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World FX rates YTD	http://tmsnrt.rs/2egbfVh 

Global asset performance http://tmsnrt.rs/2yaDPgn BOJ keeps rates steady BOJ keeps rates steady https://reut.rs/4aSLW3u

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