* US and European stock indexes hit records

* ECB keeps rates at 4%

* Bank of Japan chatter and Japanese data send yen soaring

* Gold shines at record high, Bitcoin takes a breather

* Graphic: World FX rates http://tmsnrt.rs/2egbfVh

LONDON, March 7 (Reuters) -

Stock indexes rallied to record highs on Wall Street and Europe on Thursday, while government bond yields fell after the European Central Bank held interest rates steady and Fed Chair Jerome Powell reiterated that easing was likely in 2024, if inflation behaved.

The yield on benchmark 10-year U.S. Treasury note hit a near one month low then steadied as investors adjusted positions before Friday's February U.S. payrolls report, the most anticipated monthly U.S. economic release because of it's centrality to the Federal Reserve's high employment and low inflation mandates.

While the ECB left its policy rate at a record high, it took a first, small step towards lowering it, saying inflation was easing faster than it anticipated only a few months ago.

"We are making good progress towards our inflation target and we are more confident as a result - but we are not sufficiently confident," ECB President Christine Lagarde told a press conference.

That sent the pan-European STOXX 600 to a record high. It closed up 0.99%, while Europe's broad FTSEurofirst 300 index rose 20.37 points, or 1.03%

Powell on Wednesday testified

before the House Financial Services Committee that rate reductions will "likely be appropriate" this year "if the economy evolves broadly as expected" and once officials gain more confidence in inflation's steady decline. He repeated those comments before the Senate Banking Committee on Thursday.

"The data comes out, the market reacts. Then it's always filtered through 'How does the Fed see this?' Obviously, there is a major focus on the rate cut time table so that tomorrow's release will be important," said Quincy Krosby chief global strategist LPL Financial.

Krosby said the market is not hoping for a blowout number. Rather it is focused on whether or not wages have leveled off while underpinning a "still resilient labor market."

Wall Street's three main indexes advanced to record intra highs. The Dow Jones Industrial Average rose 120.57 points, or 0.31%, to 38,782.31, the S&P 500 gained 54.59 points, or 1.07%, to 5,159.35 and the Nasdaq Composite gained 267.55 points, or 1.67%, to 16,299.09.

Likewise for MSCI's gauge of stocks across the globe , which went up 7.76 points, or 1.01%, to 773.64.

"It's never been a bad thing to have synchronized global central bank policy. By that I mean the ECB is on a similar trajectory as the Federal Reserve is," said Art Hogan, chief market strategist at B Riley Wealth in New York.

Parallel monetary policies would stabilize currencies, he said.

The dollar was heading toward its biggest fall since late December against the yen, which rose on data showing Japanese workers' nominal pay surged in January, after the country's major employment union won big pay hikes in 2024 wage talks.

BOJ board member Junko Nakagawa signaled her conviction that conditions for phasing out negative rates were now falling into place.

Against the Japanese yen, the dollar weakened 0.9% to 148.02. The dollar index fell 0.51% at 102.81, with the euro up 0.44% at $1.0945.

The resurgent yen pulled Japanese stock indexes down from near records.

Japan's Nikkei fell 492.07 points, or 1.23% while MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.52% higher.

The 10-year Treasury note yield continued a week-long slide to its

lowest in about a month

before steadying. It was last off 0.6 basis point at 4.098%, versus 4.104% late on Wednesday.

That followed a similar drop in German Bund yields .

In cryptocurrencies, bitcoin gained 1.68% at $67,583.00. Ethereum rose 0.52% at $3870.60.

Gold prices

hit an all-time high

on Thursday as Powell's comments fostered expectations for lower U.S. interest rates this year, which would make zero-yield gold more attractive to investors.

Spot gold was up 0.55% in late trade at $2,160.19 an ounce. U.S. gold futures gained 0.4% to $2,158.90 an ounce.

Oil prices ended little changed.

U.S. crude slipped 20 cents per barrel to close at $78.93 and Brent settled flat $82.96 per barrel.

(Reporting by Marc Jones and Alden Bentley; Editing by Hugh Lawson, Richard Chang, Peter Graff)