By Koh Gui Qing and Tom Wilson

NEW YORK/LONDON (Reuters) -The dollar fell while stocks eked out slim gains on Monday as investors treaded carefully before the U.S. presidential election that will impact the world economy, with a U.S. Federal Reserve interest rate cut also expected later in the week.

In the U.S. presidential race, Democratic candidate Kamala Harris and Republican candidate Donald Trump remain virtually tied in opinion polls ahead of Tuesday’s vote. It might not be clear who has won for days after voting ends.

Trump’s policies on immigration, tax cuts and tariffs may put upward pressure on inflation, bond yields and the dollar, analysts believe, while Harris is seen as the continuity candidate.

“We are too evenly divided and polarized to suggest a red sweep,” Frank Luntz, Republican consultant and pollster, told the Reuters Global Markets Forum. “The Senate looks like it will swing Republican, but the presidency and the house are simply too close to call,” Luntz said.

MSCI’s gauge of stocks across the globe added 0.3%, while the dollar index, which measures the greenback against a basket of currencies, eased 0.29% to 103.63.

The dollar slid against a host of European and Asian currencies, losing 0.76% against the euro to $1.090, and falling 0.7% against the Japanese yen to 151.90. [USD/]

The U.S. Treasury market, which has priced for a Trump victory in the past month that sent yields shooting higher, saw traders square positions on Monday after a poll showed Harris with a surprise lead in Iowa. [US/]

U.S. Treasury yields fell across the board. The yield on the benchmark U.S. 10-year note fell 9 basis points (bps) to 4.28%, on track for its largest daily fall since late August.

The U.S. two-year Treasury yield fell for the first time in six days, down 6.8bps at 4.135% and on pace for its biggest one-day decline in two months.

European stocks were flat, with energy stocks among top gainers as a decision by OPEC+ to delay plans to increase output pushed up oil prices.

British stocks outperformed continental indexes to add 0.4%, helped by the energy sector.

“Tomorrow will shape the direction of the world economy and geopolitics for the next four years,” Deutsche Bank analysts wrote.

They cautioned that “there remains a large degree of uncertainty around both the result, including the very tight House (of Representatives) race, and when we will know it.”

RATES FOCUS

The week will also provide investors with global monetary policy catalysts. The most closely watched of a slew of rate decisions is the Fed, while decisions are also due from the Bank of England (BoE), the Reserve Bank of Australia (RBA), Sweden’s Riksbank and Norway’s Norges Bank.

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