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GLOBAL MARKETS-Stimulus hopes ease markets into explosive Q4

* World stocks start quarter higher

* U.S. stocks extend gains as U.S. stimulus talks progress

* Tokyo trading halted by system glitch

* Uncertainties over U.S. election cloud outlook (updates after European open)

LONDON, Oct 1 (Reuters) - Renewed U.S. stimulus hopes lifted global markets into what is set to be an explosive fourth quarter on Thursday, though an all-day outage on Tokyo’s Nikkei meant it wasn’t exactly a smooth start.

Europe’s STOXX 600 index and the euro were up 0.7% and 0.2% respectively before PMI economic data expected to show the region’s ongoing gradual recovery from coronavirus slump.

The dollar was at a one-week low, as robust U.S. data on Wednesday and hopes for U.S. fiscal stimulus led investors to riskier currencies.

With U.S. elections, the race for a COVID-19 vaccine and a no-deal Brexit deadline all looming, today was likely to be the calm before the storm, said Chris Dyer, Eaton Vance’s director of global equity.

“What I have been saying is that the equity markets are likely to move violently sideways in the next few months,” he said, though in 12 months the trajectory should be one of global recovery.

Asian trading saw a 0.4% rise on MSCI’s regional index , led by 1.1% and 1.5% gains in Australia and India. The day was dominated, though, by technical problems at Tokyo Stock Exchange, the world’s third-largest stock market.

TSE President Koichiro Miyahara apologised at a news conference. He said the exchange decided to suspend the full day of trading because an early resumption could cause market confusion, but it planned to restart on Friday.

S&P500 futures rose 0.4%, extending Wall Street’s rebound amid strong employment data and talk of progress on long-delayed COVID-19 relief legislation.

The pound was 0.6% weaker, after British and European Union negotiators failed to close the gap on state aid in their latest round of talks, one of the key elements blocking post-Brexit trade ties.

British factory activity did grow for a fourth month in a row and coronavirus vaccine developments underpinned market sentiment, despite fast-rising infection rates in Europe and the United States.

The euro rose 0.1% to $1.1756 while the Australian dollar ticked up 0.2% to $0.7181.

In commodities, oil prices were subdued after their 10% drop in September, with U.S. crude futures at $39.91 per barrel and Brent futures at $42.33 a barrel.

Reporting by Marc Jones

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