GLOBAL MARKETS-World shares look past lockdowns as U.S. election approaches

* Graphic: 2020 asset performance

* Graphic: World FX rates in 2020

* MSCI World index up 0.2%, Brent crude down 3%

* Attention turning to U.S. elections on Tuesday

MILAN/SYDNEY, Nov 2 (Reuters) - World shares recovered from one-month lows on Monday as upbeat Chinese data offset new lockdowns in Europe, while investors prepared for more volatility arising from the U.S. presidential election.

MSCI world equity index, which tracks shares in 49 countries, rose 0.2% by 0858 GMT, following a strong performance in Asia after data showed Chinese factory activity expanded at its fastest pace in a decade.

Europe was off to a more cautious start after the UK became the latest country in the region to announce a fresh lockdown as a second wave of COVID-19 infections threatened to overwhelm its health service.

In the euro zone, Italy was also set to approve new restrictions as early as Monday after moves in France and Germany last week caused a broad risk-off move across markets.

The FTSEurofirst 300 benchmark fell early but managed to find some footing as investors bet the lockdowns wouldn’t last as long as the previous round. The index, which reached a five-month low last week, was last up 0.2%.

“Europe is facing up to a harsh winter ahead,” Deutsche Bank strategist Jim Reid said in a note. “The question to be asked to all the European countries is can they come out of these measures in some form towards the end of November/early December as is hoped or will they be extended further.”

The focus was increasingly shifting towards the U.S. election on Tuesday. Republican President Donald Trump trails Democratic challenger Joe Biden in national opinion polls, but polls in the states that will decide the election show a closer race.

“Given the likelihood that the outcome of the presidential election will be unclear on Wednesday, and possibly for much longer, volatility could easily pick up and it might become a severe roller-coaster ride,” UniCredit strategists said.

Analysts are concerned that an uncertain outcome could cloud the prospects for fiscal stimulus in the world’s largest economy. Also crucial for the size of a possible stimulus will be which party wins the Senate.

The VIX volatility index, which rose to its highest in four months last week, was up nearly 1 point at 38.4. U.S. stock index futures were up 0.4% to 0.5%, suggesting mild gains on Wall Street at the open.

Meantime, the fresh lockdowns in Europe and parts of the United States have raised concern over the outlook for fuel consumption. Brent crude prices fell to a low of $35.74 per barrel, a level not seen since late May. It was last down 3.1% at $36.81. U.S. crude went as low as $33.64.

Global coronavirus cases surpassed 500,000 last week with Europe crossing the bleak milestone of 10 million total infections. The UK is grappling with more than 20,000 new cases a day while a record surge in U.S. cases is killing up to 1,000 people a day.

In currencies, the risk-sensitive Australian dollar slipped 0.4% to go below 70 U.S. cents for the first time since July. It was last at $0.6999.

The Japanese yen was higher at 104.73 per dollar. The British pound was last 0.7% lower at $1.2858. The euro slipped to $1.1627.

That left the index that measures the dollar against a basket of other currencies, up at 94.22..

A risk-on revival after the U.S. election could see the dollar resume its slide from March’s highs, analysts said.

JPMorgan said the market probably views a Biden win as “short-term neutral” but “long-term negative” as his expected tax policy outweighs the benefits from a large stimulus package. (Reporting by Danilo Masoni and Swati Pandey, editing by Larry King)