* Nikkei jumps 6 pct though most of Asia trading thin
* Australia dollar sinks after central bank slashes rates
* Yen, short-term government bonds still investor
favourites
(Updates prices, adds Australia central bank, Europe outlook)
By Kevin Plumberg
HONG KONG, Nov 4 (Reuters) - Japan's Nikkei index rose
nearly 6 percent on Tuesday, playing catch-up after a holiday,
but other stock gains were tame after reports pointed to a
shrivelling U.S. economy ahead of the presidential election.
Major European share indexes were expected to open little
changed, according to financial bookmakers, as investors
digested the latest batch of weakening earnings, including
those from Swiss bank UBS AG and Swiss Re, the world's
second-biggest reinsurer.
The elimination of uncertainty surrounding the election
could provide a short-term boost to the U.S. dollar and
equities, though the longer-term impact on investor sentiment,
especially with regard to rescue policies shaped only in the
last several weeks, was unclear.
"Depending on the actual results, the U.S. election may
provide some support to markets globally as it may be seen as
the promise of more fiscal stimulus, particularly if Obama wins
the election," currency strategists with Calyon in Hong Kong
said in a note.
Meanwhile, Australia's central bank cut its cash rate by a
bigger-than-expected three quarters of a percentage point,
weighing on the Australian dollar. []
The Nikkei ended the day up 6.3 percent <> after a
holiday on Monday, having rallied nearly 30 percent from a
26-year intraday low hit a week ago.
Asia-Pacific stocks traded outside Japan slipped 0.8
percent, according to an MSCI index <.MIAPJ0000PUS>, snapping a
five-day winning streak. The index has retraced a third of the
decline that happened in the wake of Lehman Brothers' collapse
in mid-September, and was just shy of a 38.2 percent rebound, a
key technical obstacle.
South Korea's KOSPI <> rose 2.2 percent, up for a
second day after the government unveiled an additional $11
billion in tax cuts and other measures to boost the economy.
Australia's benchmark S&P/ASX 200 index <> finished
hardly changed, cutting losses after the Reserve Bank of
Australia's deep cut gave a boost to bank and retailer shares.
CUT, CUT, CUT
The European Central Bank and the Bank of England will
probably both cut rates after they meet on Thursday, as
policymakers race to keep their economies tumbling into deep
recessions.
Global manufacturing activity contracted for a fifth
consecutive month in October, falling to a record low, a JP
Morgan Global Manufacturing PMI survey showed, and U.S. car
sales dropped by a third to the lowest in 25 years.
Furthermore forecasts for growth in big energy consuming
countries has been scaled back. For example, Credit Suisse cut
its forecast for 2009 gross domestic product growth to 7.2
percent from 8.8 percent.
Synchronised rate cutting by central banks around the world
as well as emergency government spending packages worth some $4
trillion have brought back investors from pushing markets down
an abyss. However, some analysts say it may be premature to
dive back into risky assets.
"We expect another major episode of risk aversion to take
hold of markets in the near future, with the potential for
commodities and stocks to hit new lows for the year. This would
bode well for the yen and short ends of G-3 bonds," said
Dariusz Kowalczyk, chief investment strategist with CFC Seymour
in Hong Kong.
The euro fell by as much as 1.5 percent to 123.43 yen
<EURJPY=R> but later trimmed its losses to stand at 124.35 yen,
down 0.8 percent on the day. The euro fell to a 6-1/2-year low
around 113.62 yen in late October.
The dollar slipped 0.5 percent to 98.62 yen <JPY=>.
Traders said the dollar may have a hard time rising above
the psychologically important 100.00 yen level in the near term
as Japanese exporters were expected to sell dollars to
repatriate their profits near that level.
Commodity prices have been clobbered on expectations of
easing demand.
U.S. crude for December delivery <CLc1> was trading down 14
cents, or 0.2 percent, at $63.78 a barrel, after settling down
$3.90 on Monday.
Gold in the spot market rose 0.5 percent to $726.25, though
weak physical demand kept a lid on prices.
(Editing by Lincoln Feast)
