* U.S. stocks surge in broad relief rally on Election Day
* Credit thaw weakens bid for short-term government debt
* Oil jumps on signs Saudis make substantial output cuts
* Three-month dollar Libor slips to lowest since June 9
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, Nov 4 (Reuters) - Oil jumped more than 10 percent
and gold shot higher after investors dumped the U.S. dollar on
Tuesday in favor 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 Oct. 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 <> 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 <> was up 53.55 points, or 3.10
percent, at 1,779.88.
Oil giants Chevron <CVX.N> and Exxon Mobil <XOM.N>, along
with commodities-related Caterpillar <CAT.N> provided the
biggest lift to the Dow. Chevron rose 6.1 percent, Exxon gained
4.3 percent and Caterpillar jumped 8.3 percent.
Economic bellwether General Electric <GE.N> rose 7.6
percent after The Wall Street Journal reported the U.S.
Treasury Department may use part of a $700 billion rescue
package to buy stakes in a wide range of financial companies,
such as GE Capital.
Strong earnings at MasterCard Inc <MA.N> and Archer Daniels
Midland Co <ADM.N> bolstered optimism about consumer spending
and corporate pricing power despite the stalled economy.
Speculation of aggressive cuts in interest rates also
lifted the spirits of investors.
The European Central Bank and the Bank of England are
expected to cut interest rates this week after Australia's
slashed rates more deeply than forecast.
The FTSEurofirst 300 <> index of top European shares
closed up 4.3 percent at 974.15 points, its sixth straight day
of gains. But the benchmark is down 35.4 percent this year.
BP <BP.L> rose 4.9 percent, Royal Dutch Shell <RDSa.L>
gained 6.7 percent and gas producer BG Group <BG.L> jumped 8.4
percent.
Banking shares rose on hopes the financial sector jitters
may ease, sending Societe General <SOGN.PA> up 11.2 percent and
HBOS <HBOS.L> 10.6 percent.
The rate at which banks lend dollar funds to each other
fell, pushing benchmark three-month borrowing costs to their
lowest in five months.
The London interbank offered rates for three-month dollar
funds at the British Bankers' Association's daily fixing was
2.70625 percent <USD3MFSR=>, marking the 17th consecutive daily
decline and the lowest level since June 9.
Longer-dated euro-zone government bond prices rose as
investors mulled a potentially chunky ECB rate cut this week,
and U.S. short-term Treasuries dipped as climbing stocks cut
off any safe-haven buying.
The benchmark 10-year U.S. Treasury note <US10YT=RR> surged
47/32 in price to yield 3.73 percent while the 2-year U.S.
Treasury note <US2YT=RR> added 3/32 in price to yield 1.38
percent.
Saudi Arabia has reduced exports after the Organization of
Petroleum Exporting Countries agreed in October to lower
output, according to trade sources.
U.S. crude <CLc1> settled up $6.62 at $70.53 a barrel.
London Brent crude <LCOc1> rose $5.96 to settle at $66.44 a
barrel.
U.S. futures for December delivery <GCZ8> settled up $30.50
at $757.30 an ounce in New York.
Gold rose on a weaker dollar, with investors keeping a
close eye on the currency on Election Day.
A win by Obama, who led McCain in most polls, would be
marginally better for the dollar because the Democrats already
control Congress, analysts say.
"The U.S. election might have an impact on the euro/dollar
and so indirectly would have an impact on gold as well," said
Eugen Weinberg, an analyst at Commerzbank.
Japan's Nikkei index <.225> ended the day up 6.3 percent
after a holiday on Monday, but Asia-Pacific stocks traded
outside Japan slipped 0.8 percent, according to an MSCI index
<.MIAPJ0000PUS>.
(Reporting by Leah Schnurr, Chris Reese, Nick Olivari and
Edward McAllister in New York and Atul Prakash, Jamie McGeever
and Emelia Sithole-Matarise in London; writing by Herbert
Lash;)
