Global stocks, Mexican peso advance of U.S. election results

By Chuck Mikolajczak

NEW YORK (Reuters) - Global equity markets climbed and the Mexican peso rallied on Tuesday as investors leaned towards the possibility of a victory for Democratic candidate Hillary Clinton in one of the most contentious U.S. presidential election campaigns in history.

After trading near the flat line for the early portion of the session, U.S. equities turned higher, with each of the three major indexes near session highs.

While the dollar strengthened slightly against a basket of currencies, the Mexican peso shot to a two-month high versus the greenback.

The Mexican currency has been a market proxy for sentiment over the U.S. election and has performed in inverse correlation with Republican candidate Donald Trump's perceived chances of winning the White House. The iShares MSCI Mexico ETF , touched its highest level since mid-August and was last up 2.2 percent.

Mexico is considered most vulnerable to Trump's planned trade policies as 80 percent of its exports go to the United States.

Market participants cited projections from data firm Votecastr which showed Clinton in the lead in several battleground states.

"The Votecastr has Clinton ahead in every state it's following except for Pennsylvania," said Win Thin, Global Head of Emerging Market Currency Strategy at Brown Brothers Harriman & Co in New York.

"So I think everyone is focussed on Florida as a must-win for Trump and at this point Hillary appears to be running ahead, according to early returns."

The market has been pricing in a win for Clinton, including a 2 percent jump in the S&P 500 on Monday after the FBI maintained its view that no criminal charges were warranted in a probe over her email practices.

The Dow Jones industrial average rose 135.25 points, or 0.74 percent, to 18,394.85, the S&P 500 gained 14.66 points, or 0.69 percent, to 2,146.18 and the Nasdaq Composite added 46.40 points, or 0.9 percent, to 5,212.58.

Safety play gold weakened, down 0.4 percent to $1,276.65 an ounce and yields on U.S. Treasuries touched a one-week high.

At the end of a bruising election campaign, the Reuters/Ipsos States of the Nation poll gave Clinton a 90 percent chance of defeating Trump and said she was on track to win 303 Electoral College votes out of 270 needed, to Trump's 235.

Europe's index of leading 300 shares , which posted its biggest gain in two months on Monday, closed 0.3 percent higher. MSCI's all-country world index was up 0.5 percent after notching its best day since late June on Monday.

Clinton, generally seen as a known quantity, has been the preferred candidate for investors over political wild card Trump. But investors remained wary, noting Britain's shock vote in June to leave the European Union had caught investors and pollsters off guard.

"Certainly the market is trying to predict a Clinton victory here, for whatever reason, all things point to that," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.

"But it is certainly too early - nobody knows anything."

Benchmark 10-year U.S. Treasury notes fell 13/32 in price to yield 1.8744 percent after touching a high of 1.876 percent, up from Monday's 1.828 percent.

(Additional reporting by Dion Rabouin; Editing by Dan Grebler and James Dalgleish)