Global stocks mostly steady ahead of U.S. vote

By Kevin Plumberg

HONG KONG (Reuters) - Japan's Nikkei index rose nearly 6 percent on Tuesday, playing catch-up after a holiday, but other stock gains were tame after reports pointed to a shrivelling U.S. economy ahead of the presidential election.

Major European share indexes were expected to open little changed, according to financial bookmakers, as investors digested the latest batch of weakening earnings, including those from Swiss bank UBS AG and Swiss Re, the world's second-biggest reinsurer.

The elimination of uncertainty surrounding the election could provide a short-term boost to the U.S. dollar and equities, though the longer-term impact on investor sentiment, especially with regard to rescue policies shaped only in the last several weeks, was unclear.

"Depending on the actual results, the U.S. election may provide some support to markets globally as it may be seen as the promise of more fiscal stimulus, particularly if Obama wins the election," currency strategists with Calyon in Hong Kong said in a note.

Meanwhile, Australia's central bank cut its cash rate by a bigger-than-expected three quarters of a percentage point, weighing on the Australian dollar.

The Nikkei ended the day up 6.3 percent .N225 after a holiday on Monday, having rallied nearly 30 percent from a 26-year intraday low hit a week ago.

Asia-Pacific stocks traded outside Japan slipped 0.8 percent, according to an MSCI index .MIAPJ0000PUS, snapping a five-day winning streak. The index has retraced a third of the decline that happened in the wake of Lehman Brothers' collapse in mid-September, and was just shy of a 38.2 percent rebound, a key technical obstacle.

South Korea's KOSPI rose 2.2 percent, up for a second day after the government unveiled an additional $11 billion (7 billion pounds) in tax cuts and other measures to boost the economy.