GLOBAL MARKETS-U.S. vote in focus, euro slips on Greece

Tue Nov 6, 2012 8:57am EST

* European, world shares edge up ahead of U.S. election
    * Dollar index near two-month high
    * Greece worries push euro to two-month lows vs dollar

    By Marc Jones
    LONDON, Nov 6 (Reuters) - European equities edged higher on
Tuesday helped by stronger travel and technology stocks but no
major moves were expected until investors know the result of the
U.S. presidential vote.
    Uncertainty over Greece's next aid payment and gloomy euro
zone economic data pushed the euro to a new two-month low.
    Polls indicate the election between President Barack Obama
and Republican challenger Mitt Romney will be close and the
uncertainty put markets in a cautious mood. 
    "Everybody is waiting on the U.S. election, people are
waiting on (leadership transition) China and also on what
happens in Greece where it is incredibly important that it gets
this new money," said ABN Amro economist Aline Schuiling.
    China's new leadership team will be unveiled this month
    As U.S. voting got under way, stock index futures pointed to
a higher Wall Street open, with the S&P 500, Dow Jones
 and Nasdaq 100 indicated up 0.2 percent ahead of
the opening bell.
    World stocks on the MSCI global index were
up 0.2 percent by 1300 GMT and top European shares were
up 0.4 percent as both clawed back some of Monday's falls.
    European technology shares were the top sectoral
gainers, led by buying of chip designer ARM. Travel and
leisure stocks also advanced 0.9 percent as
InterContinental Hotels said it was looking to sell one
of its top New York hotels. 
    In currency markets the euro fell to a two-month low
of $1.27635, versus the dollar before some early
afternoon buying reeled it back up above $1.2800.
    The Greek parliament will vote on Wednesday on 13.5 billion
euros of fresh spending cuts and tax hikes that are crucial to
unlocking 31.5 billion euros in aid from an IMF and EU bailout
that has been on hold for months. 
    "We are seeing investors getting disillusioned about the
euro zone, the positive factor from the ECB's plan to buy bonds
is fading and that is fundamentally weighing on the euro," said
Neil Mellor, currency strategist at Bank of New York Mellon. 
    "There isn't much progress on when Spain will seek a bailout
and now we have the Greek vote. Suffice to say if the vote
fails, the euro will drop and the dollar will rally, but even if
the vote passes, any rally in the euro will be short-lived."
    
    DATA WOES
    Data from Europe was also weighing on the euro. The European
Central Bank and the Bank of England both meet on Thursday.
Neither is expected to cut rates or provide further policy
stimulus although Tuesday's data may cause concern.
    Purchasing managers data (PMIs), which gauges the activity
of thousands of companies worldwide, showed euro zone businesses
endured their worst month in October since June 2009, with
little hope of a turnaround. 
    The euro zone relies heavily on Germany, its largest
economy, to generate growth. Business activity there shrank at a
faster pace last month and new data showed industrial orders in
September plummeted more swiftly than expected.
    In Britain, retail sales slowed rapidly, industrial
production fell 1.7 percent month-on-month and a fall in house
prices accelerated. .
    "Given the stabilisation in financial markets, and in
consumer sentiment indicators in some countries, we thought
perhaps you would see some stabilisation in the (euro zone)
PMIs," said HSBC economist Janet Henry. 
   
    
    FISCAL CLIFF 
    After the election, the U.S. Congress must deal with a
"fiscal cliff" of up to $600 billion in expiring tax and
spending reductions that could damage the world's most powerful
economy.
     U.S. Treasuries were range-bound in early U.S. trading as
investors refrained from placing big bets. In European markets,
German government bonds were also steady. 
    "There doesn't seem to be massive positioning either way
before the election," said one London-based bond trader.  
    "The feeling is that if Obama wins, it's going to be fairly
dovish from the Fed point of view but I'm not sure we're going
to see major moves either way," he said. 
    Risk-aversion kept the dollar near a two-month high against
a basket of major currencies. 
    Oil and gold prices were both little changed, with Brent oil
in a tight range at just under $108 a barrel and gold 
creeping up to $1,691.46 an ounce as it stabilised near a
two-month low in the previous session. 
    In Asian trading, the MSCI index of Asia-Pacific shares
outside Japan ended the day up 0.5 percent
despite a 0.4 percent dip by Japan's Nikkei.
    In Australia the Aussie dollar hit a five week high
and shares rose 0.2 percent after the country's central
bank surprised by keeping rates on hold.
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