LONDON – European markets moved higher Tuesday on expectations Wall Street will enjoy an election day rally and ahead of Thursday's interest rate decisions from the European Central Bank and the Bank of England.
The FTSE 100 index was 78.65 points, or 1.8 percent, higher at 4,521.93, while Germany's DAX was up 95.14 points, or 1.9 percent, at 5,121.98. France's CAC-40 was 76.44 points, or 2.2 percent, higher at 3,604.41.
Most Asian stock indexes were more or less flat, apart from Japan's Nikkei, which surged 537.62 points, or 6.3 percent, at 9,114.60 as the market played catch-up after being closed Monday, when most of Asia firmed.
Wall Street is expected to enjoy an election day rally, with Dow futures up 183, or 2.0 percent, at 9,515, with investors relieved that the political uncertainty will soon be over.
"In the U.S., there's only one show in town at the moment but Europe has been reasonably strong after some half-decent numbers," said Richard Hunter, a strategist at Hargreaves Lansdown.
"Whilst the wider economic picture remains awkward, there have been a few positives the markets are clinging onto," he added.
He noted Marks & Spencer PLC, Britain's largest clothing retailer, which saw its share price rise 7 percent as third-quarter net profit came in ahead of expectations despite falling 43 percent from a year ago.
Hunter also said interbank lending rates in Europe continue to decline ahead of expected interest rate reductions Thursday from the European Central Bank and the Bank of England.
Both banks are expected to follow the U.S. 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.
Ahead of the rate decisions, the markets will be digesting the outcome of the U.S. presidential election. 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.
The Dow Jones index of leading shares, which closed Monday 5 points lower at 9,319.83, traditionally does well between the day of the U.S. election and the end of the year, though the boost ends up short-lived.
"The bad news is that the honeymoon has tended to end rather quickly," said John Higgins, an analyst at Capital Economics.
Earlier, Australia's financial issues improved after the Reserve Bank of Australia slashed rates for the third time in as many months, reducing its cash rate by a larger than anticipated 0.75 percentage points to 5.25 percent. That helped the S&P/ASX 200 index pare earlier losses to close largely flat.
Hong Kong's Hang Seng Index added 0.3 percent to 14,384.34 after fluctuating through the day, with bank shares up as lending conditions eased further.
South Korea's Kospi rose 2.2 percent, while benchmarks in Singapore and Shanghai fell.
In mainland China, the market dropped for a third day, led by mining and metals stocks. The benchmark Shanghai Composite Index slipped 0.8 percent to 1,706.7. Losers included China Shenhua Energy Ltd., the country's biggest coal producer, and Kailuan Clean Coal Ltd.
Oil prices rose, with light, sweet crude for December delivery declining $0.48 to $64.39 a barrel in European trade on the New York Mercantile Exchange.
In currencies, the dollar rose 0.5 percent to 99.62 yen, but the euro was 1.0 percent higher at $1.2764.