GLOBAL MARKETS-Stocks and oil rally; dollar falls as Fed meets

* World stocks near 2-yr high on positive economic data

* US stocks up on expected Republican congressional gains

* Dollar falls broadly, oil and bond prices higher
(Updates with European stock market close)

By Walker Simon

NEW YORK, Nov 2 (BestGrowthStock) – World stocks neared a 2-year
high on Tuesday after stronger-than-expected economic data
while the dollar fell as investors anticipated the U.S. central
bank will open the money spigot to spur the flagging U.S.

U.S. stocks (Read more about the stock market today. ) also got a boost from investors’ expectations
of strong Republican gains in Congress halfway through the term
of Democratic U.S. President Barack Obama. Shares in sectors
such as healthcare, deemed likely to benefit from the
rebalancing of power, advanced.

In campaigns, Republicans accused Democrats of stifling
business with regulations and failing to extend tax cuts, while
Democrats countered with claims that Republicans blocked
economic recovery programs.

“I think it is people trying to get in front of what they
think will be the election results,” said Rick Meckler,
president of investment firm LibertyView Capital Management in
New York, in reference to expectations of Republicans’ gains.

The dollar fell against a basket of major currencies, with
the U.S. Dollar Index (.DXY: ) down 0.78 percent. A drop in the
greenback makes dollar-denominated commodities, including oil,
cheaper for non-U.S. investors. U.S. crude oil futures gained
1.2 percent to nearly $84 a barrel.

European equities hit a six-month closing high on Tuesday,
lifted by energy companies after the price of oil rose.

Euro-zone manufacturing picked up its pace last month, a
business survey showed Tuesday, one day after
better-than-expected U.S. and Chinese factory data increased
optimism about the global economy and revived risk appetite.
For details, see [ID:nLDE6A10TX]

“From a global perspective, the growth outlook looks solid
and that’s feeding some appetite for risk,” Omer Esiner, chief
market analyst at Commonwealth Foreign Exchange in Washington,

The euro traded above $1.40, buoyed by the European
economic data. But traders doubted the euro would be able to
stay above this level, with uncertainty over the extent of the
Fed’s asset purchases. The Fed announcement is expected on
Wednesday at the end of a two-day policy meeting.

Markets have priced in Fed asset buying of $100 billion a
month for five months in an attempt to bring long-term interest
rates evem lower and stimulate a sluggish U.S. economy.


The program’s size is key. A larger-than-expected program
of asset buying, which has been described as printing money,
would weigh on the dollar and boost commodity prices, while a
smaller round of purchases could curb investors’ appetite for

The MSCI world equity index (.MIWD00000PUS: ) rose 0.87
percent to 319.54, a whisker shy of the two year-high of 319.84
hit on Oct. 25.

The FTSEurofirst 300 (.FTEU3: ) index of top European shares
rose 0.6 percent to end the day provisionally at 1,093.96
points, its highest close since late April.

On Wall Street, the Dow Jones industrial average(.DJI: )
advanced 77.61 points, or 0.70 percent, to 11,202.23. The
Standard & Poor’s 500 Index (.SPX: ) rose 9.53 points, or 0.80
percent, to 1,193.91. The Nasdaq Composite Index (.IXIC: )
climbed 24.65 points, or 0.98 percent, to 2,529.49.

Most gains came from sectors expected to benefit from a
rebalancing of power in the U.S. Congress. Among those expected
to thrive if Republicans regain control of Congress are the
health insurers, a sector hurt by the Democrats’ push to reform
healthcare. Republicans have vowed to repeal the healthcare
reform law.

On Monday, a Reuters/Ipsos poll found Republicans are
poised to take control of the House, gaining at least 50 seats,
but they are unlikely to win a majority in the Senate.

In foreign currency (Read more about trading foreign currency. trade, the euro (EUR=: ) rose 1.07
percent to $1.4037 from a previous session close of $1.3889.

Against the Japanese yen, though, the dollar (JPY=: ) was up
0.34 percent at 80.75 from a previous session close of 80.480.

U.S. light sweet crude oil (CLc1: ) rose $1.01, or 1.22
percent, to $83.96 per barrel, gaining after OPEC member Libya
said oil producers would find prices of $100 a barrel more
comfortable, due to higher food prices and a weaker dollar.

Spot gold (XAU=: ) benefited from the dollar’s decline
against a basket of major currencies, with the price of gold
rising to $1,354.36 an ounce from $1,351.51 late on Monday.

Prices of U.S. Treasuries climbed on talk about the size
of the Fed’s expected bond-buying program. The benchmark
10-year U.S. Treasury note (US10YT=RR: ) was up 7/32, with the
yield at 2.603 percent.

The 30-year U.S. Treasury bond (US30YT=RR: ) was up 31/32, or
almost a full point, with the yield at 3.946 percent.

In Asian trading hours, Japan’s broad-based Topix index
fell to its lowest in 19 months on Tuesday as the yen’s
strength against the dollar earlier in the day hurt exporters’
shares. The Topix (.TOPX: ) dipped 0.02 percent to end at 803.12,
a 19-month low, while the benchmark Nikkei (.N225: ) inched up
0.06 percent to end at 9,159.98, off a seven-week low.
(Reporting and writing by Walker Simon; Additional reporting
by Angela Moon and Gertrude Chavez-Dreyfuss in New York and
Natsuko Waki in London; Editing by Jan Paschal)

GLOBAL MARKETS-Stocks and oil rally; dollar falls as Fed meets