* World stocks near 2-year high on positive economic data
* US stocks up on expected Republican congressional gains
* Dollar falls broadly, oil and bond prices higher
(Updates with U.S. markets' close)
By Walker Simon
NEW YORK, Nov 2 (Reuters) - World stocks neared a two-year
high on Tuesday on 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. economy.
U.S. stocks 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.
Japanese stocks were set for a strong opening, with Nikkei
futures traded in Chicago <NKZ0> jumping 85 points to 9,225.00.
The dollar fell against a basket of major currencies, with
the U.S. Dollar Index <.DXY> down 0.74 percent. A drop in the
greenback makes dollar-denominated commodities, including oil,
cheaper for non-U.S. investors. U.S. crude oil futures for
December delivery <CLc1> gained 95 cents, or 1.15 percent, to
settle at $83.90 a barrel.
European equities hit a six-month closing high on Tuesday,
lifted by energy companies after the price of oil rose.
GROWTH PICTURE IMPROVES
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.
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"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,
said.
The MSCI world equity index <.MIWD00000PUS> rose 0.84
percent to 319.45, a whisker shy of the two year-high of 319.84
hit on Oct. 25.
The FTSEurofirst 300 <> index of top European shares
rose 0.52 percent to end the day at 1,093.65 points, its
highest close since late April.
The euro traded above $1.40, buoyed by the European
economic data. But traders doubted it would be able to stay
above this level due to 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 even lower and stimulate a sluggish U.S.
economy.
SIZE MATTERS
The size of the Fed's program 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 risk.
On Wall Street, the Dow Jones industrial average <>
rose 64.10 points, or 0.58 percent, to end at 11,188.72, while
the Standard & Poor's 500 Index <.SPX> gained 9.19 points, or
0.78 percent, to 1,193.57. The Nasdaq Composite Index <>
climbed 28.68 points, or 1.14 percent, to close at 2,533.52.
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.
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> gained 10/32, with the
yield at 2.592 percent.
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 trading, the euro <EUR=> rose 1.04
percent to $1.4034 from a previous session close of $1.3889.
Against the Japanese yen, though, the dollar <JPY=> was up
0.17 percent at 80.62.
Spot gold <XAU=> benefited from the dollar's decline
against a basket of major currencies. The price of the metal
rose 0.38 percent to $1,355.90 an ounce.
(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)
