Oil jumps, dollar slumps on U.S. Election Day

By Herbert Lash

NEW YORK (Reuters) - Oil jumped more than 10 percent and gold shot higher after investors dumped the U.S. dollar on Tuesday in favour of commodities and stocks, relieved that the Election Day ends the uncertainty over who will be the next American president.

The U.S. dollar slumped in its biggest one-day drop against a basket of currencies in 13 years as investors bet interest rate cut around the world, typically a boost for the U.S. currency, will stimulate growth and ease the global financial crisis.

U.S. and European shares surged as commodity stocks tracked rising crude oil and metals, and investors brushed aside more dire U.S. economic data as they awaited to see whether Barack Obama or John McCain would be the next U.S. president.

New orders received by U.S. factories tumbled for a second straight month in September, dropping 2.5 percent to a seasonally adjusted $432 billion, a Commerce Department report said. Economists were expecting a 0.8 percent decline.

The Dow rose more than 3.0 percent and the broad S&P 500 gained more than 4.0 percent, tracking a similar rise in European shares. The S&P closed above the 1,000 mark for the first time since October 13.

It was the largest Election Day rally ever in the United States, a market holiday before 1984.

"I think the election is overriding everything. It seems to be on everybody's mind, so even though any economic number at this point is important, the thing is we have a bigger story," Joe Saluzzi, co-manager trading at Themis Trading in Chatham, New Jersey.

The Dow Jones industrial average .DJI closed up 303.38 points, or 3.26 percent, at 9,623.21. The Standard & Poor's 500 Index .SPX was up 38.95 points, or 4.03 percent, at 1,005.25. The Nasdaq Composite Index .IXIC was up 53.55 points, or 3.10 percent, at 1,779.88.