LONDON, September 07 (AFP) - Wall Street and European stock markets posted sharp gains Tuesday as voting got underway in a historic US presidential election, with investors hoping a new leader will provide a fresh start out of the financial crisis. Solid gains in New York gave added impetus to European markets, which moved ahead strongly in late trade after a mixed day in Asia. Americans began voting with front-running Democrat Barack Obama seeking to become the first black president and his Republican rival John McCain hoping for an unprecedented comeback. Dealers said investors were hoping a clear cut election result would remove a major uncertainty, with markets looking for decisive fresh leadership on resolving the global financial crisis. "The market reaction will depend on the decisiveness of the victories for the presidency, and equally as important, the House and Senate," said David Keeble, Global Head of Interest Rate Strategy at Calyon. "We think a decisive win in the Senate for the Democrats ... as well as a win for Senator Obama ... would boost risk appetite," he said. "This outcome would potentially pave the way for another sizeable fiscal package which would be pushed through rather quickly relative to the (700 billion dollar TARP) bailout plan, for instance .

" On Wall Street trade, the Dow Jones Industrial Average was up 3.04 percent around 1630 GMT. The rally "is being driven primarily by the understanding that today is Election Day," said Patrick O`Hare at Briefing.com. "It`s not a bid, though, rooted in the expectation that one candidate will prevail over the other. Rather, it`s a bid rooted in the understanding that there will finally be clarity on the matter," O`Hare noted. At the close in Europe, London`s FTSE 100 index of leading shares was up 4.42 percent to 4,639.50 points, the CAC 40 in Paris advanced 4.62 percent to 3,691.09 points and in Frankfurt the DAX gained 5.0 percent to 5,278.04 points. Gains were even more substantial elsewhere, with Madrid advancing 5.36 percent, Milan soaring 6.86 percent and Amsterdam up 6.05 percent while Belgium put on 2.79 percent and Switzerland gained 2.66 percent. In Asia, Tokyo jumped more than six percent on Tuesday, boosted by a weaker yen and reports of a possible takeover of struggling electronics maker Sanyo by its bigger rival Panasonic .

Japanese investors were also playing catch-up as the Tokyo market had been closed on Monday for a public holiday. The gains in Europe came despite negative earnings news from British retailer Marks and Spencer, banking giant Royal Bank of Scotland, German luxury car maker BMW, Swiss temp agency Adecco and Swiss Re, the world`s biggest reinsurer. Dealers said investors were betting that the winner of Tuesday`s US vote would take additional steps to tackle a looming recession in the United States, the world`s largest economy. "All eyes will be on the US presidential election today, even though a win by Obama is widely expected and probably well discounted by financial markets," said Barclays Capital analyst Rodrigo Guimaraes. "We think an Obama victory ... is likely to lead to more expansive fiscal policy and a more protectionist-minded White House. "But in the short-term, an Obama victory, combined with a strong majority in the Senate ... will enable Washington to respond more proactively on the management of the financial crisis," Guimaraes said .

Central bankers meanwhile continued their efforts to restore stability to world markets and stop the global economy slipping into a long downturn. Reserve Bank of Australia (RBA) slashed its key lending rate by a bigger-than-expected 75 basis points. The European Central Bank (ECB) and the Bank of England are expected to follow suit on Thursday. The RBA, which has cut rates by 2.0 percentage points since September, said the aggressive reduction was warranted given the economic climate. "International economic data have continued to point to significant weakness in the major industrial economies, and there have been further signs that China and other parts of the developing world are slowing as well," said RBA governor Glenn Stevens. Plunging auto sales in the United States and Japan provided fresh evidence of the fallout of the credit crunch, while the world`s biggest reinsurer Swiss Re posted a quarterly loss of 258 million dollars due to the market turmoil. Analysts said growing worries about the health of the global economy could put the brakes on the recent rally in world share prices .