* Risk appetite supported, markets see less chance of Trump
* Second debate with Clinton ends with no knockout blows
* Mexican peso, Canadian dlr hold early gains
* Sterling slipping again, lacking liquidity with Japan off
* Yuan hits six-year low as China returns from long holidays
By Wayne Cole
SYDNEY, Oct 10 The Mexican peso climbed and
stocks crept higher on Monday as markets saw less chance of a
victory by Republican nominee Donald Trump in his U.S.
presidential bid amid a scandal over comments he made about
A holiday in Tokyo limited the reaction in equities and
MSCI's broadest index of Asia-Pacific shares outside Japan
was up a slight 0.1 percent. Spread betting
sites pointed to modest opening gains in Europe.
EMini futures for the S&P 500 rose 0.2 percent, as
did Australian stocks, while Shanghai firmed 1.2
percent as markets there returned from a long holiday.
Going the other way, Thailand stocks fell 2.9 percent
after the palace said in a statement that 88-year-old
King Bhumibol Adulyadej's health was in an unstable condition.
Trump faces the biggest crisis of his 16-month-old campaign
after a tape of him making vulgar comments about women deepened
fissures with establishment Republicans.
A second debate with Democrat Hillary Clinton came and went
with little immediate impact on investor thinking.
Presidential betting markets had lengthened the odds on a
Trump victory, while the FiveThirtyEight site of well-regarded
forecaster Nate Silver put the probability of a Clinton win at
over 81 percent.
Markets generally see Clinton as a known factor with middle
of the road policies. There is far more uncertainty about what a
Trump administration would mean for U.S. foreign policy, trade,
the economy and even governance at the Federal Reserve.
In particular, Trumps' plans to slap tariffs on imports and
renegotiate the North American Free Trade Agreement (NAFTA) are
seen as very negative for Mexico and Canada, which is why their
currencies swing when his odds of winning change.
Both currencies gained on Monday, with the U.S. dollar down
1.6 percent on the Mexican peso at 19.02 and off 0.3
percent on its Canadian counterpart.
The dollar dipped a touch on the yen to 102.97, while
the euro was little moved at $1.1187.
POUND IN PERIL
Sterling was losing ground again at $1.2402 after
its flash crash last Friday, with dealers braced for more
volatility amid concerns about a "hard" Brexit.
A survey out on Monday showed key measures of UK business
investment and turnover confidence hit four-year lows in the
"The uncertainty of leaving the single market is causing
enormous concern over the future of the UK economy and the
funding of its twin deficits," said analysts at ANZ.
"Moreover, the rhetoric from the UK government on
immigration and EU legislation has hardened of late at the same
time as the EU's position is also hardening."
China's central bank set the value of its yuan at
the lowest since September 2010, and spot yuan briefly fell
through the key psychological support level of 6.7 to the dollar
to a six-year-low, prompting traders to wonder if it was putting
the currency back on a slow depreciation path.
A similar drop in mid-July prompted a flurry of intervention
by state-run banks which lasted on and off through September,
but investors took the latest fall calmly, unlike sometimes in
the past when such moves sparked market unease.
There was relief that U.S. payrolls data last Friday were
solid enough but not so hot as to add to the risk of a rate hike
from the Federal Reserve.
Fed fund futures <0#FF:> imply less than 10 percent chance
of a move in November, rising to around 65 percent for December.
In commodity markets, oil prices dipped further on Monday as
players took profits following a strong rally last week spurred
by talk of OPEC output cuts.
Benchmark Brent was off 52 cents at $51.41 a barrel,
while U.S. crude eased 55 cents to $49.26.
Spot gold regained some ground to $1,262.00, after
suffering its largest weekly drop in over three years.
(Editing by Kim Coghill & Shri Navaratnam)