(Adds close of U.S. markets)
* World share markets rally as U.S. votes for president
* Dollar, government bonds drop as risk appetite rises
* Oil gains about 2% on recovery outlook
* Investors gird for volatility if election outcome disputed
* MSCI ACWI gains 1.79%; EM stocks rise 0.44%
* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
By Herbert Lash and Huw Jones
NEW YORK/LONDON, Nov 3 (Reuters) - The dollar slid and
global equity markets rose on Tuesday on bets of increased
stimulus if Joe Biden wins the U.S. presidential election
against President Donald Trump, but gold prices edged higher on
the potential for contested voting results.
The former Democratic vice president is expected to boost
stimulus spending and be less-combative on trade, which would
lift other currencies at the dollar's expense.
Biden has held a strong lead in national polls, but
Republican Trump is close enough in swing states possibly to
gain the 270 Electoral College votes needed to retain the
presidency. "Asset classes are to a certain degree behaving as if
Biden's going to win and the Democrats are going to take the
Senate," said Marvin Loh, senior global macro strategist at
State Street. "Maybe the market is getting comfortable with a
blue wave. I'm not convinced that's the case."
The strong equity rally the past two days would indicate
something has become more definitive, yet the election outcome
may be days if not longer away, Loh said.
Phil Orlando, chief equity market strategist at Federated
Hermes in New York, said Biden will overwhelmingly win the
popular vote, but the election is likely to be contested.
While economic data suggests the economy has done well under
Trump, "the Senate is more important than the presidency in
terms of the stock market," Orlando said.
Investors hedged their bets, seeking the safety of
safe-haven gold, which also can rally due to a weaker dollar.
Stocks rose on Wall Street and in Europe on hopes for more
fiscal stimulus to combat a growing coronavirus pandemic.
Stocks climbed in Asia after the Reserve Bank of Australia
cut interest rates to near zero and boosted its bond-buying
program, a precursor to expectations the Bank of England on
Thursday will also ramp up its bond purchases. "The sole driver behind gold prices is the high likelihood
that there is going to be chaos surrounding the U.S. elections,
from the predictions of not having a president by tonight," said
Jeffrey Sica, founder of Circle Squared Alternative Investments.
U.S. gold futures GCv1 settled up 0.9% at $1,910.40 an
ounce, while MSCI's benchmark for global equity markets
.MIWD00000PUS rose 1.79% to 567.83 and Europe's broad
FTSEurofirst 300 index .FTEU3 added 2.35% to 1,378.11.
On Wall Street, the Dow Jones Industrial Average .DJI rose
2.06%, the S&P 500 .SPX gained 1.78% and the Nasdaq Composite
.IXIC added 1.85%.
In Europe, growth-sensitive cyclical sectors such as oil and
gas .SXEP , mining .SXPP and banks .SX7P once again led the
rally.
Analysts said that while the mood was more upbeat on
Tuesday, it remained weak at heart as European countries
introduced tougher lockdowns to fight a pandemic that was set to
hit their economies harder.
Investors await the outcomes of Federal Reserve and Bank of
England meetings this week, which are also expected to bring
more support.
"The problem with markets is that they are very binary. One
day everything is hunky dory and the next day it's the depths of
despair, and so you have to tread that tightrope between the two
that creates volatility," said Michael Hewson, chief market
analyst at CMC Markets.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS added 1.4% overnight. The gauge is less than 1%
shy of a two-and-a-half-year high struck in mid-October and up
over 5% this year, driven by a 37% rebound from China's markets
since March.
Currency markets tilted toward a victory for Biden.
The dollar index =USD fell 0.588%, with the euro EUR= up
0.61% to $1.1711. The Japanese yen JPY= strengthened 0.21%
versus the greenback at 104.50 per dollar.
The 10-year U.S. Treasury US10YT=RR note rose 4.4 basis
points to 0.8925%.
Oil prices gained about 2% as financial markets staged a
broad recovery despite growing concerns that surging coronavirus
cases around the world would further crimp fuel demand.
Brent crude futures LCOc1 rose 74 cents to settle at
$39.71 a barrel. U.S. crude futures CLc1 settled up 85 cents
at $37.66 a barrel.
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World stocks market cap rise over last four years https://tmsnrt.rs/2TL19hh
Major world stock indexes over the last four years https://tmsnrt.rs/326YYsP
Key emerging currencies being split by U.S. election https://tmsnrt.rs/326Toa7
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