GLOBAL MARKETS-Shares rally ahead of U.S. election, dollar steady

* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
* MSCI Asia-exJapan index holds onto gains, up 1.2%
* European stock futures indicate strong market open

By Anshuman Daga
SINGAPORE, Nov 3 (Reuters) - Asian equity markets rallied on
Tuesday, with investors buoyed by strong factory output data
from major economies, while the dollar and gold were little
changed ahead of U.S. elections.
Elsewhere, S&P 500 futures ESc1 rose 0.5%, EUROSTOXX 50
futures STXEc1 put on 0.8% and FTSE futures FFIc1 gained
0.9%, indicating a strong market open, even though many market
participants expect short-term volatility, especially after a
jittery week.
President Donald Trump and Democratic rival Joe Biden made a
last-ditch push for votes in battleground states on Monday as
their campaigns prepared for post-election legal disputes that
could delay a clear outcome. "We all hate uncertainties. We all want to see risk
sentiment improved. So we all hope for a clear, uncontested
winner in the presidential election," said Song Seng Wun, an
economist at CIMB Private Banking.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS added 1.2%, up for the second straight session.
The gauge is just 1% shy of a 2-1/2 year high struck in
mid-October and up 5% so far this year.
Strategists at Blackrock Investment Institute said polls
were suggesting a greater likelihood of a Democratic sweep in
the election.
"We are starting to incorporate themes we believe would
outperform in that event, moving toward a more pro-risk stance
overall despite last week's market pullback," the strategists
said in a report.
South Korea's main index .KSII advanced 1.7%, Hong Kong's
index .HSI sprinted 2.2% higher and Chinese blue chips
.CSI300 were 0.8% higher. Japanese markets were closed for a
holiday.
"We are upgrading Asia ex-Japan equities and Asia fixed
income to overweight, as China and other Asian economies have
done a better job of containing COVID–19 and are further ahead
in the economic restart," BlackRock Investment Institute said.
"We expect this dynamic to continue over the months ahead."
Data showed economic activity was improving across the
board.
U.S. manufacturing activity accelerated more than expected
in October, with new orders jumping to their highest in nearly
17 years, while Chinese factory activity expanded the fastest in
a decade and euro zone manufacturing also sped up. Analysts said the prospect of no immediate winner in the
presidential race was the biggest drag on markets. Trump trails
Biden in national opinion polls, but polls in the swing states
that will decide the election show a closer race.
"Control of the Senate is crucial for any 'blue wave'
scenario to materialise, otherwise divided government continues
and fiscal stimulus expectations will need to be scaled back,"
said Alvin Tan, Asia forex strategist at RBC Capital Markets.
The U.S. dollar hovered just below a one-month high. Against
a basket of currencies =USD it held at 93.996. The
safe-harbour yen JPY= was steady at 104.72 yen per
dollar. FRX/
The Aussie AUD=D3 fell 0.2% and Australia's ASX 200
.AXJO ended 2% higher as the country's central bank trimmed
interest rates to near zero and expanded its bond-buying
programme, as expected. Oil prices steadied after two weeks of weakness, with Brent
futures LCOc1 down 0.2% to $38.89 a barrel, but hanging on to
most of an overnight bounce. O/R
Still, the uncertainty of the U.S. election and a resurgence
in COVID-19 cases in Europe and the United States underpinned
the dollar and gold prices, as some investors sought safety.
Gold XAU= eased 0.1% to $1,892.5 an ounce, while the
dollar index =USD held ground at 94.027.
Investors are bracing for an eventful week with central bank
meetings by the Federal Reserve and Bank of England, as well as
the release of U.S. jobs data for October.