World stocks modestly higher ahead of U.S. election

World stock markets were modestly higher Monday in light trading volumes ahead of Tuesday’s U.S. presidential election – though further dismal U.S. economic data capped any gains.

The Dow Jones index of leading U.S. shares was up 28.59 points, or 0.3 percent, at 9,353.60. It had been up 60 points at the open but further dismal U.S. economic data prompted some profit-taking following last week’s strong performance.

The FTSE 100 index of leading British shares closed 65.94 points, or 1.5 percent, higher at 4,443.28, while France’s CAC-40 was up 40.90 points, or 1.2 percent, at 3,527.97. Germany’s DAX was 38.87 points, or 0.8 percent, higher at 5,026.84.

Trading volumes were light through the day and ranges were narrow as investors remain wary of piling back into stocks after October saw the biggest bout of selling for twenty years.

“Volumes have been light. I think there is a high degree of investor uncertainty about the direction of the markets,” said Neil Mackinnon, chief economist at ECU Group.

Stocks had moved into negative territory for a brief while after the Institute for Supply Management said its index of manufacturing activity in the U.S. fell to 38.9 in October from 43.5 in September. The reading was below expectations of a more modest decline to 41.5 and is the worst outcome since September 1982.

Investors are also awaiting the outcome of Tuesday’s U.S. presidential election, even though polls show Democratic Senator Barack Obama leading Senator John McCain, a Republican.