A look at the day ahead in U.S. and global markets from Mike Dolan Wall Street stocks and bonds remained relatively buoyant after last week's action-packed macro week with world markets drawn more to French political uncertainty and the deepening Chinese home price bust.

With trouble brewing overseas, Wall Street stock futures held the line close to last week's new records on Monday as Goldman Sachs raised its 2024 year-end S&P500 target to 5,600 from 5,200 earlier and Friday's 5,431 close.

The investment bank cited strong earnings growth by the five mega-cap tech stocks and a higher fair value price-to-earnings ratio.

Even though long-term U.S. Treasury yields swooned below 4.2% last week for the first time since April 1, as disinflation resumed alongside a hawkish policy tilt from Federal Reserve policymakers, the dollar surged anyway and recorded its best week in almost two months.

That's largely down to investor fright at French President Emmanuel Macron's decision to call snap parliamentary elections for next month, with the French far right high in the polls at this month's European elections.

With French sovereign credit ratings in the balance and nerves about the fiscal implications of a change in the parliamentary majority, the premium on French 10-year government debt yields over Germany soared last week to their highest since 2017 at more than 77 basis points.

France's CAC40 stock benchmark skidded 4.6% over the week, underperforming Wall Street and world indexes by 6.8% and 5.5% respectively.

Although both French stocks and bonds calmed a touch on Monday, potential ructions at the heart of the euro zone saw the euro slide to six-week lows against the dollar on Friday - recovering only modestly on Monday to regain a foothold above 1.07.

Broader euro zone government debt spreads widened too, although euro zone stocks steadied on Monday.

Wall Street bank Citi's global equity strategists cut European equities to neutral from overweight, citing increased political risks in France.

European Central Bank Chief Economist Philip Lane said on Monday that the upheaval in euro zone bond markets, centred around France, was not disorderly so far, effectively playing down the need for the ECB to intervene.

"What we are seeing in the markets is a repricing but it is not in the world of disorderly markets right now," Lane told a Reuters NEXT Newsmaker interview at the London Stock Exchange.

The picture in Asia was no better after China's latest monthly economic data sweep and as the People's Bank of China left key interest rates unchanged.

While China retail sales beat forecasts in May, industrial production missed expectations.

But coming on the back of further deflationary signals from China last week, the property sector is still the main worry.

Chinese new home prices slipped 0.7% in May, marking the 11th straight month-on-month decline and the steepest drop since October 2014. That as the central bank last month announced a relending programme for affordable housing to accelerate sales of unsold housing stock.

Chinese stocks and the offshore yuan edged lower.

Japan's Nikkei share index underperformed, dropping almost 2% to below the psychologically key 38,000 level for the first time this month as a risk-off mood prevailed amid concerns about economic growth both at home and abroad.

Toyota Motor slid 2.6% amid continued fallout from a certification scandal, with car-related shares among the worst performing sectors. National broadcaster NHK reported that Toyota would extend a production halt for affected models by at least an extra month to the end of July.

Japanese Prime Minister Fumio Kishida also said on Monday he has no plan to instruct, or request, the government's pension fund to buy the Bank of Japan's holdings of exchange-traded funds.

Kishida also said the government and the Bank of Japan (BOJ) share the view that consumption lacked strength as wages have failed to rise enough to compensate for rising prices.

With doubts about the timing of further BOJ tightening, the dollar rose against the yen too

Key diary items that may provide direction to U.S. markets later on Monday: * New York Fed June manufacturing survey; Canada May housing starts * New York Fed President John Williams, Philadelphia Fed President Patrick Harker and Fed Board Governor Lisa Cook speak; European Central Bank Vice President Luis de Guindos speaks * US Treasury auctions 3-, 6-month bills * US corporate earnings: Lennar, Quantum

(By Mike Dolan, editing by Sharon Singleton mike.dolan@thomsonreuters.com)