* European shares climb, Nasdaq expected to open 3% higher
* 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
* Emerging market FX sees strong gains, yuan at 28-month
high
* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
By Marc Jones
LONDON, Nov 5 (Reuters) - World tech stocks and bond markets
extended their blistering rally on Thursday as Democrat Joe
Biden inched closer to winning the White House and Britain's
central bank became the latest to say it will pump out more
stimulus.
Biden is now favoured to oust Donald Trump after victories
in Michigan and Wisconsin. But with Democrats unlikely to win
control of the Senate, investors leapt on the idea of gridlock
in Congress sparing Silicon Valley tougher regulation.
European tech shares jumped nearly 3% .SX8P .EU , while
Nasdaq futures NQc1 pointed to it doing the same thing when
Wall Street reopens, after Amazon AMZN.O , Facebook FB.O and
Google GOOGL.O all soared 6% to 8% on Wednesday. .N
The bond bulls were also happy after the Bank of England
added another 150 billion pounds ($195.20 billion) to its asset
purchase programme. Italy's five-year bond yields
fell below zero for the first time, while the U.S. Fed was also
expected to sound reassuring later. EUR/GVD
"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," said Michele Pedroni, a fund manager at
Decalia Asset Management in Geneva, referring to the likely
election outcome having some advantages.
Asia stocks .MIAPJ0000PUS had rallied 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.
The race was coming down to close contests in five states.
Biden held narrow leads in Nevada and Arizona while Trump was
watching his slim advantage fade in must-win states Pennsylvania
and Georgia as mail-in and absentee votes were being counted.
The Republican president clung to a narrow lead in North
Carolina as well, another must-win for him, but he has also
filed lawsuits and demanded recounts that could keep some
uncertainty dragging on.
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)
EMERGING WINNERS
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 pounds 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, even if
it decides to lay low this time.
"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 down 0.6% at 92.888 =USD
and set for its biggest three-day drop since July.
The greenback also scuttled back to 104.15 yen JPY= after
rising as high as 105.32 overnight. The euro sprang to $1.1812
EUR= , up from a low of $1.1602, while Mexico's peso MXN= and
a 28-month high for China's yuan CNH= led broad-based gains in
emerging market currencies. EMRG/FRX
"If you look at the renminbi (yuan) move, it is definitely
pricing in an alleviation of the trade tensions," said Lombard
Odier's Global Head of FX Strategy Vasileios Gkionakis. "And I
still think the dollar goes lower from here."
PRECIOUS
Sterling recovered after a 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 $1,923 an ounce XAU= and the other
main precious pairing of silver XAG= and palladium XPD= both
up 3%.
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 $38.72 a barrel, though that
followed a rise of 4% on Wednesday. Brent crude LCOc1 futures
fell 50 cents to $41.02 after a 15% bounce over the last three
days. O/R
($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
Emerging winners https://tmsnrt.rs/3eFqmU9
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