By Chuck Mikolajczak
NEW YORK (Reuters) - Global equity markets climbed and the Mexican peso rallied on Tuesday as investors tilted toward a potential victory for Democratic candidate Hillary Clinton in the U.S. presidential election.
Markets turned higher near midday after treading water for the early portion of the session, although U.S. equities finished off the session's 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 closed up 1.8 percent.
Mexico is considered most vulnerable to Trump's trade policies, since 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, although they also questioned the accuracy of the data.
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.
"There is enough uncertainty and enough dismay in the aggregate for this election season that people are nervous one way or the other," said Keith Bliss, senior vice-president at Cuttone & Co in New York.
"However, the reason you see the rallies on the positive Clinton news is the market likes consistency and it likes continuity."
The Dow Jones industrial average rose 72.83 points, or 0.4 percent, to 18,332.43, the S&P 500 gained 8.01 points, or 0.38 percent, to 2,139.53 and the Nasdaq Composite added 27.32 points, or 0.53 percent, to 5,193.49.
Safety play gold weakened, down 0.4 percent to $1,275.80 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. [nL1N1D90G2]
Europe's index of 300 leading shares, which posted its biggest gain in two months on Monday, closed 0.3 percent higher. MSCI's all-country world index was up 0.4 percent and is up 2 percent for the past two sessions.
Clinton, generally seen as a known quantity, has been the preferred candidate for investors over political wild card Trump. But markets remained wary, noting Britain's shock vote in June to leave the European Union had caught investors and pollsters off guard.
Benchmark 10-year U.S. Treasury notes fell 11/32 in price to yield 1.8672 percent after touching a high of 1.876 percent. [nL1N1D90UH]
(Reporting by Chuck Mikolajczak; Editing by Dan Grebler)