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GLOBAL MARKETS-Stocks mixed as balance tilts to Biden in U.S. election

* European stocks lower on profit taking, virus angst

* U.S. futures point to lower Wall Street opening

* Japan’s Nikkei hits 29-year high

* U.S. bond yields steady, dollar under pressure

* Oil suffers from COVID-19 worries

* Asian stock markets: tmsnrt.rs/2zpUAr4

LONDON/TOKYO, Nov 6 (Reuters) - Global stocks held near a record high on Friday while bets that a divided U.S. Congress would hinder government borrowing and potentially pave the way for even more Federal Reserve stimulus kept the dollar and U.S. bonds sluggish.

Markets were also awaiting the release of the U.S. non-farm payrolls report for October later in the session.

Investors expect Democrat Joe Biden will beat President Donald Trump but that Republicans will keep control of the Senate, allowing them to block Democratic policies such as corporate tax hikes and debt-funded spending on infrastructure.

“From here, we believe the impact of the presidential result should be relatively small,” said Lars Kreckel, global equity strategist at LGIM. “Whether Biden or Trump are in the White House, governing with a Congress that is very likely to be divided would be difficult and mean very little policy that could significantly move equity markets would be passed.”

MSCI’s all-country index of the world’s 49 markets was 0.1% up, smaller gains than earlier in the week but still close to the record reached in September. The index is on course for its best week in nearly seven months.

Biden took a narrow lead over Trump in the battleground state of Georgia early on Friday and had a 253 to 214 lead in the state-by-state Electoral College vote that determines the winner, according to most major television networks, putting him closer to the 270 Electoral College votes needed to win.

A sense that a Biden presidency will be more predictable than Trump’s is underpinning risk sentiment, even though investors saw no quick rapprochement between the United States and China on trade and other issues.

Europe’s main stock index was 0.5% lower on Friday as investors fretted about the economic toll of new coronavirus lockdowns in Europe and data showing German industrial output rose less than expected in September. Italy and France registered record numbers of COVID-19 cases.

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..

U.S. S&P futures dropped 0.7%, a day after the underlying stock index rose 1.95%.

U.S. bond yields were broadly steady, with the 10-year Treasury yield at 0.775%, below the pre-U.S. election level on Tuesday. It had struck a three-week low of 0.7180% on Thursday.

Bond markets in general were subdued ahead of the payrolls numbers, which are expected to show the smallest gain last month since the jobs recovery started in May, although Italy’s 10-year yield hit a record low on expectations of further stimulus.

The 10-year BTP yield was down 2.3 basis points at 0.610% , having earlier fallen to a historic low of 0.603%.

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.

Investors also focused on the prospects of stalled talks on a U.S. coronavirus relief package restarting.

“We still anticipate that there will be a fiscal package in excess of $1 trillion next year,” said James Knightley, chief international economist at ING Group in New York.

“This stimulus, when combined with a long-anticipated COVID-19 vaccine, can really lift the economy and drive growth. We consequently remain very upbeat on the prospects for 2021 and 2022.”

In currency markets, lower yields undermined the dollar, whose index touched a two-month low of 92.459.

The euro, which has risen this week on dollar weakness and hopes of a European Union budget deal, traded at $1.1840 while the offshore Chinese yuan climbed to 6.6000 to the dollar .

The greenback fell further against the Japanese yen, trading near an eight-month low at 103.23 yen.

Gold, which is used as a hedge against inflation in an era of ultra-loose monetary and fiscal policies, was little changed at $1,947.31 per ounce ounce.

Oil prices fell as fresh lockdowns in Europe to contain the coronavirus darkened the outlook for crude demand. Brent crude was down 2.8% at $39.80 a barrel. West Texas Intermediate futures were down 3.1% at $37.60 a barrel.

Additional reporting by Koh Gui Qing in New York; Editing by Sam Holmes and Catherine Evans

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