World markets surge as US votes

London - World markets pushed higher on Tuesday as America went to the polls and a leading US investment bank told its clients in Europe to buy stocks after the savaging they have taken in the last few weeks.

The Dow Jones index of leading US shares was 203.66 points or 2.2%, higher at 9 523.49 even though analysts generally do not believe that one candidate will boost the beaten down market more than the other.

Britain's FTSE 100 index was 116.49 points, or 2.6%, higher at 4 559.77, while Germany's DAX was up 133.68 points, or 2.7%, at 5 160.52. France's CAC-40 was 92.30 points, or 2.6%, higher at 3 620.27.

Most Asian stock indexes were more or less flat, apart from Japan's Nikkei, which surged 537.62 points, or 6.3%, at 9 114.60 as the market played catch-up after being closed on Monday, when most of Asia rose.

The US presidential election is dominating sentiment in US markets during Tuesday having been an afterthought for much of the last few weeks during the financial crisis.

Opinion polls on the eve of the vote showed that Democratic candidate Senator Barack Obama was leading Republican rival Senator John McCain, and that the Democrats could be on course to take a firmer grip on Congress.

"This election may have attracted a lot of attention in the media, but appears to have the lowest impact on financial markets of any election for many decades, doubtless a recognition that whoever is president, he will inherit a $1 trillion budget deficit and a banking system that has all but failed," said Marc Ostwald, an analyst at Monument Securities.

Also helping European stocks was a note from Morgan Stanley recommending European investors to buy stocks and having reversed its "full house sell signal" of June 2007 to a "full house buy signal". It had been one of the first major investment banks to look for the stock market exit door last year.

European shares have also been boosted by the ongoing decline in interbank lending rates ahead of expected interest rate reductions on Thursday from the European Central Bank and the Bank of England.

Both banks are expected to follow the US Federal Reserve's lead and cut interest rates by at least half a percentage point, though there's growing talk that the Bank of England may reduce interest rates by as much as a full percentage point for the first time since four cuts of that size in 1992-3 when Britain's economy was last mired in recession.

- Sapa-AP