Shares jump as Biden edges toward victory, dollar slips

(Adds gold, oil settlement prices; details on FOMC meeting)

* Equity markets gain in worldwide rally

* MSCI ex-Japan index hits highest since early 2018

* Split Congress seen lessening risk of regulation, tax increases

* BOE injects another 150 billion pounds into bond buying

* MSCI ACWI gains 2.25%; EM stocks rise 2.88%

* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn

* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh

NEW YORK, Nov 5 (Reuters) - The dollar slipped and global stock markets surged on Thursday as Democrat Joe Biden drew closer to victory in the tight U.S. elections, while the Bank of England became the latest central bank to say it will boost stimulus, a move that favors stocks.

Biden appeared set to defeat Republican President Donald Trump as counting continued from voting on Tuesday. But the Trump campaign said it expected to launch more legal action and would emerge victorious.

Investors leapt on the prospect of gridlock in Congress and the notion Silicon Valley will be spared greater oversight as the Democrats are unlikely to win control of the Senate.

Tech shares in Europe jumped 2.5%, extending a rally of just over 8% this week, while the tech-heavy Nasdaq composite index, S&P 500 and Dow industrials rose 2% or more.

European stocks hit two-week highs on strong earnings results and after the BofE increased its already huge bond-buying stimulus by 150 billion pounds ($195 billion), or about 50 billion pounds more than expected.

The Federal Reserve kept its loose monetary policy intact and pledged again to do whatever it can in coming months to sustain a U.S. economic recovery threatened by the spreading coronavirus pandemic.

"All indications in the market seem to really be putting this whole event in the rearview mirror, which is a little surprising to me considering how tight some of this stuff is," said Patrick Leary, chief market strategist and senior trader at Incapital in Minneapolis.

Equities have surged as the size of a fiscal stimulus deal reached in a divided Congress to support the economy is likely to be much smaller than anticipated under a Biden-led blue wave.

But that likely will force the Fed to pump more money into markets, which ultimately supports equities.

(For the latest election results and more coverage, click: https://www.reuters.com/world/us-election2020)

MSCI's benchmark for global equity markets rose 2.26% to 591.98, while Europe's broad FTSEurofirst 300 index closed up 0.94% at 1419.84.

On Wall Street, the Dow Jones Industrial Average rose 1.94% and the S&P 500 gained 2.10%. The Nasdaq Composite added 2.61%, lifting the tech-heavy index to possibly close at its highest level since early September.

Overnight in Asia, stocks rallied 2% to their highest since February 2018. Japan's Nikkei rose 1.7% to a more than nine-month top, South Korea gained 2.4% and Chinese blue chips added 1.3% on hopes a Biden White House would ease up on tariffs.

The dollar fell to two-week lows against a basket of currencies and a seven-month low against the Japanese yen as the likelihood of a Democratic blue wave in the White House and Congress slowly vanished, snuffing any large U.S. stimulus package.

The dollar index fell 0.85%, while MSCI's benchmark for global equity markets rose 2.26% to 591.98.

"The market's assuming that Biden wins the White House but that the Senate is not going to be in the Democrats' hands, so you don't have as big of a stimulus," said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.

U.S. Treasury yields edged higher after dropping from four-month highs as a large jump in near-term supply to fund stimulus became less likely, reducing the appeal of the debt and weighing on the dollar.

Weak economic growth is putting a damper on the ability to offer higher interest rates for government debt, which is weighing on the dollar, Chandler said.

The euro was up 0.88% to $1.1825 and the Japanese yen strengthened 0.96% versus the greenback to 103.54 per dollar.

The Chinese yuan gained to a more than two-year high of 6.5994. The currency had been slammed by Sino-U.S. disputes since the outbreak of the bilateral trade war in 2018.

Gold surged as the dollar slipped, with spot prices rising 2.42% to $1,949.26 an ounce.

U.S. gold futures settled up 2.7% at $1,946.80.

The 10-year U.S. Treasury note rose 0.3 basis points to 0.7713%.

Italy's five-year bond yields fell below zero for the first time.

Oil prices dropped on growing concerns about weak demand as the economy sputters during a resurgent coronavirus pandemic.

Brent crude futures settled down 30 cents at $40.93 a barrel. U.S. crude futures fell 36 cents to settle at $38.79 a barrel.

(Reporting by Herbert Lash; additional reporting by Karen Brettell in New York, Marc Jones in London, Wayne Cole in Sydney and Danilo Masoni in Milan; Editing by Hugh Lawson, Dan Grebler and Richard Chang)