GLOBAL MARKETS-Stocks edge higher, dollar slips as Biden victory looms

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* Strong private sector jobs data lifts bond yields

* Dollar slips to two-month low, gold trends higher

* Japan’s Nikkei hits 29-year high

* Oil suffers from COVID-19 worries

NEW YORK/LONDON, Nov 6 (Reuters) - Global stock markets edged higher and the dollar sank to a two-month low on Friday as investors awaited final vote processing in the U.S. presidential election that showed Joe Biden on the verge of winning the White House.

Treasury yields rose on better-than-expected October employment data, while oil prices slid below $40 a barrel as new lockdowns in Europe to halt the surging COVID-19 pandemic dimmed the demand outlook.

MSCI’s all-country world stock index rose 0.19% to 592.5, adding to a week-long rally that has seen the benchmark for global equity markets advance more than 7%. The index is on course for its best week in nearly seven months.

In Europe, the broad pan-regional FTSEurofirst 300 index dropped 0.12% to 1,418.13.

Biden took the lead over President Donald Trump in the battleground states of Pennsylvania and Georgia for the first time on Friday, but Georgia ordered a recount that could lead to a long period of uncertainty, which markets dislike.

The surge in coronavirus cases, both in Europe and the United States, put a damper on the recovery outlook and investor enthusiasm that had embraced a scenario of Republicans retaining control of the Senate during a Biden administration.

“The market perhaps is starting to cheer there being some certainty to the election,” said Subadra Rajappa, head of U.S. rates strategy at Societe Generale in New York.

“There was some skittishness to the bond market when elections were too close to call. So the risk premium associated with a prolonged election uncertainty gets priced out,” Rajappa said.

Wall Street’s main stock indexes gave back some of this week’s sharp gains. The Dow Jones Industrial Average fell 0.18%, the S&P 500 lost 0.08% and the Nasdaq Composite dropped 0.18%.

Michael Englund, chief economist at Action Economics in Boulder, Colorado, said the U.S. unemployment report raised the prospect for fourth-quarter growth, putting upward pressure on bond yields.

The 10-year U.S. Treasury note’s yield rose 4.7 basis points to 0.8185%.

The U.S. unemployment rate fell to a lower-than-expected 6.9% from 7.9% in September, while growth in private payrolls blew past the consensus estimate, adding 906,000 jobs, especially in the hard hit leisure and entertainment sector.

“Overall, it was a very encouraging report. The job market is pretty broadly recovering and recovering better than most forecasters have expected,” said Russell Price, chief economist at Ameriprise Financial Services Inc in Troy, Michigan.

But a 638,000 increase in nonfarm payrolls was the smallest gain since a jobs recovery started in May, a sign the economy still needed stimulus.

Italy’s 10-year yield hit a record low of 0.603% on expectations of further stimulus.

With COVID-19 raging in the United States and parts of Europe, many investors assume more central bank stimulus is inevitable.

The Bank of England expanded its asset purchase scheme on Thursday, while the Federal Reserve kept its monetary policy loose and pledged to do whatever it takes to sustain a U.S. economic recovery. The European Central Bank is widely expected to announce more stimulus next month.

Overnight in Asia, Japan’s Nikkei average rose 0.9% to a 29-year high while MSCI’s broadest gauge of Asian Pacific shares outside Japan rose 0.3%, near a three-year high. .

In currency markets, lower yields undermined the dollar, with the dollar index touching a two-month low. It fell 0.472%, with the euro up 0.5% to $1.188.

The Japanese yen strengthened 0.24% versus the greenback at 103.24 per dollar.

Spot gold prices rose 0.17% to $1,951.81 an ounce.

Crude prices fell as fresh lockdowns in Europe to contain the coronavirus darkened the outlook for oil.

Brent crude futures fell $1.54 to $39.39 a barrel. U.S. crude futures slid $1.66 to $37.13 a barrel.

Reporting by Herbert Lash, additional reporting by Ross Kerber in Boston and Karen Pierog in Chicago; Editing by Dan Grebler