BREAKING - European Shares Rise as Investors Bet On Clear Biden Poll Win

LONDON (Reuters) - European stock markets rose in early trading on Tuesday as investors bet on a clear win for Joe Biden as the United States votes in its most polarised presidential election in living memory.

Illustration photo of uptrend graph from Brokers Watch

Steady earnings from French bank BNP Paribas BNPP.PA lifted its shares by 6.5%, adding to a sense that the banking sector was holding up relatively well to an economic pounding from the COVID-19 crisis.

But a 40% fall in full-year earnings at Associated British Foods ABF.L due to a profit plunge in its Primark clothing business was a reminder of how the pandemic is wreaking havoc with corporate balance sheets. ABF shares fell 1.7%.

U.S. President Donald Trump and Democratic rival Biden made a last-ditch push for votes in battleground states on Monday as their campaigns prepared for post-election legal disputes that could delay a clear outcome.

“Markets are pricing for a Biden win, certainly a clear outcome, and they want a clear and uncontested outcome,” said Michael Hewson, chief market analyst at CMC Markets.

A shock Trump win, a contested result or just a divided outcome could all trigger corrections in markets, he said.

The pan-European STOXX 600 index.STOXX rose 1.3% on the second day of robust gains, having slumped to a five-month low last week. Growth-sensitive cyclical sectors such as oil and gas. SXEP, miners.SXPP and banks.SX7P once again led the rally - all rising more than 2% No major European economic data is due on Tuesday, with only a smattering of earnings to steer investors. BNP bank was buoyed by a surge in currency and commodity trading to beat third-quarter profit expectations.

BINARY MARKET MOOD

Analysts said that while the mood was more upbeat on Tuesday, it remained febrile as European countries introduced tougher lockdown restrictions to fight a pandemic that was set to hit the economy further.

Investors are also waiting on Federal Reserve and Bank of England meetings this week that is also expected to bring more support.

“The problem with markets is that they are very binary. One day everything is hunky-dory and the next day it’s the depths of despair and so you have to tread that tightrope between the two that creates volatility,” CMC Markets’ Hewson said.

The global tone was helped by gains overnight on a Wall Street underpinned by U.S. manufacturing activity accelerating more than expected in October, and Asian equity markets and U.S. futures ESc1 rallying.

The dollar and gold were little changed as currency and bullion traders bunkered down ahead of the U.S. election.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS had added 1.4% overnight. The gauge is less than 1% shy of a 2-1/2 year high struck in mid-October and up over 5% this year, driven by a 37% rebound from China's markets since March.

Illustration graphic of MSCI world stocks index market cap since November 2016

South Korea's main index .KSII advanced 1.7% and Hong Kong's index .HSI sprinted 2.2% higher.

The MSCI China index hit a 23-year high after Chinese factory activity expanded the fastest in a decade.

Illustration graphic of total return on major global indices in $ terms since November 2016

Read more from the original article: https://www.reuters.com/articl...