Global markets head higher
Asian, European stocks mostly advance as investors bet on more interest rate cuts and improved credit conditions.
LONDON (CNNMoney.com) -- Global stock indexes were mostly higher Tuesday as lending rates continued to improve and the two-year race for the White House neared an end.
U.S. stock prices were higher near midday. The Dow Jones industrial average was roughly 3% higher and the S&P 500 index gained 2.7%.
European markets posted solid gains for the sixth session in a row as investors anticipate interest rate cuts from the European Central Bank and Bank of England this week.
Britain's FTSE 100 rose 4.4% and the CAC-40 in Paris added 4.6%. Germany's DAX rose 5%.
In Asia, Japan's benchmark Nikkei index rallied 6.3% as investors returned from a holiday. Tokyo markets were closed Monday.
Elsewhere in the region, Seoul's KOSPI rose 2.2%. Australia's All Ordinaries and the Taiwan Weighted index finished the day slightly down. The Hang Seng index in Hong Kong ended just 0.3% higher.
Rate-cut optimism offered stocks a boost. On Tuesday, Australia's central bank cut its benchmark interest rate by a bigger-than-expected three-quarters of a percentage point. The Bank of Japan lowered rates on Friday.
The moves are the latest efforts central banks have taken in response to the global financial crisis. The Federal Reserve slashed rates last week, and the European Central Bank and Bank of England are widely expected to lower their key short-term interest rates on Thursday.
But investors expressed caution ahead of the outcome of the U.S. presidential race between Democratic presidential candidate Sen. Barack Obama and his Republican rival Sen. John McCain.
Stocks were in a holding pattern Monday. The Dow Jones industrial average lost a few points. The S&P 500 index dipped 0.3% and the Nasdaq composite added 0.3%.
Analysts say investors will be glad to have the election over and to know that a change in administration is coming, regardless of whether McCain or Obama wins.
The financial crisis has taken center stage in the race, with the economy topping the list of issues most important to American voters.
CNN Wires contributed to this report. 
