* European shares climb as equities extend rally
* MSCI ex-Japan index hits highest since early 2018
* Wall St wagers election to result in gridlock for Biden
* Lessens risk of regulation, tax rises
* Bonds well bid on diminished chance of government spending
* BOE injects another 150 billion pounds into bond buying
* Pressure back on for Fed-led monetary stimulus
* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
By Marc Jones and Wayne Cole
LONDON/SYDNEY, Nov 5 (Reuters) - Europe and Asia's stock
markets climbed and bonds extended their rally on Thursday as
Democrat Joe Biden inched closer to winning the White House and
Britain's central bank become the latest to shovel in additional
stimulus.
Biden is now favoured to oust Donald Trump after victories
in Michigan and Wisconsin, but Democrats are unlikely to win the
Senate. That led investors to wager on a policy gridlock that
would prevent greater regulation.
With the Bank of England adding 150 billion pounds ($195.20
billion) to its bond-buying programme as Europe's markets
opened, the FTSEurofirst .FTEU3 was up 0.8% and Italy's
five-year bond yields fell below zero. EUR/GVD
Asian stocks .MIAPJ0000PUS climbed 2% overnight to reach
their highest since February 2018.
Japan's Nikkei .N225 rose 1.7% to a more than nine-month
top, South Korea .KS11 gained 2.4%, and Chinese blue chips
.CSI300 added 1.3% on hopes a Biden White House would ease up
on tariffs.
A split U.S. Congress, while potentially limiting fiscal
stimulus, would have some advantages, said Michele Pedroni, a
fund manager at Decalia Asset Management in Geneva.
"The big bad wolf of regulation and taxes is further away
from the door and many, who have de-risked into the event, will
be forced to re-risk," she said.
E-Mini futures for the S&P 500 ESc1 rose 1.6% and NASDAQ
futures NQc1 2% after both real-time markets had surged on
Wednesday as the election results unfolded. Amazon AMZN.O , Facebook FB.O and Google GOOGL.O have
all soared 6% to 8%.
Both Trump and Biden have paths to 270 Electoral College
votes as states tallied mail-in ballots. Biden remained
optimistic on winning while Trump filed lawsuits and demanded
recounts. The divided Congress that looked likely to emerge was "often
seen as the 'goldilocks scenario' for financial markets -- no
radical policy changes and the Fed providing ample liquidity to
try to support the economy and financial markets when required,"
said Randal Jenneke, a portfolio manager at T. Rowe Price.
(For the latest election results and more coverage, click:
https://www.reuters.com/world/us-election2020)
BONDS WIN BIG
Bond markets assumed a divided government would greatly
reduce the chance of debt-funded spending on stimulus and
infrastructure next year, and thus less bond supply.
That saw 10-year Treasury yields fall to 0.74% US10YT=RR ,
having touched a five-month top of 0.93% at one stage on
Wednesday. The overnight drop of 11 basis points was the largest
single-day move since March's COVID-19 panic.
The diminished chance of U.S. fiscal stimulus will put
pressure on central banks globally to inject liquidity.
The Bank of England added 150 billion pounds to a total
target of 895 billion as it sought to cushion Britain's
struggling economy against a second coronavirus lockdown.
In addition, the Federal Reserve will probably be called on,
too, said Chris Beauchamp, chief market analyst at IG.
"The Fed in particular will have to take up its QE role
again with a weary sigh, in order perhaps to provide yet another
bridge to the future when, hopefully, a government stimulus
package will have been agreed," Beauchamp said.
The prospect restrained the dollar, after a wild ride
overnight. The dollar index was last at 93.362 =USD , nearer
Wednesday's low of 93.070 than the top of 94.308.
The dollar also settled back to 104.38 yen JPY= after
rising as high as 105.32 overnight. The euro held at $1.1734
EUR= , up from a low of $1.1602.
Sterling recovered after bumpy ride on Wednesday amid
troubles of its own. Little sign of a breakthrough on Brexit has
appeared, and the Telegraph newspaper had earlier reported the
BoE was considering a move into negative interest rates.
The pound gained to $1.3023 GBP= , still down from an
overnight peak of $1.3139.
All the talk of policy easing put a floor under gold prices,
leaving the metal up at $1,909.1 an ounce XAU= .
Oil prices ran into some profit-taking. They had jumped
overnight on speculation a deadlocked U.S. government would be
unable to pass major environmental legislation that favoured
other forms of energy. O/R
U.S. crude CLc1 slipped to $38.37 a barrel, though that
followed a rise of 4% on Wednesday. Brent crude LCOc1 futures
fell 80 cents to $40.43.
($1 = 0.7685 pounds)
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Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
World stocks market cap rise over last four years https://tmsnrt.rs/2TL19hh
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