* Polls show "Remain" leading before Thursday's UK vote
* Sterling touches 2016 high, European shares climb
* Some caution remains as UK voters closely divided
(Updates with early U.S. market activity, changes dateline,
previous LONDON)
By Edward Krudy
NEW YORK, June 23 (Reuters) - Sterling climbed to a 2016
high and global stocks rallied as investors bet Britons were
likely to vote to remain in the European Union.
Oil prices rose, shrugging off a smaller-than-expected draw
in U.S. crude stockpiles, and the safe-haven yen fell against
the dollar as the last pre-vote opinion polls show the "Remain"
camp holding a small lead.
"The markets are the best judge of what is going to happen,
and they are saying that Britain will remain. The key is the
strong jump in the pound," said Peter Cardillo, chief market
economist at First Standard Financial in New York.
The pound, which has been the lightning rod for opinion on
the EU referendum throughout the six-month campaign, was up 0.7
percent at $1.48 GBP= as traders cut their bets on volatility
after the vote. GBPVOL=
Wall Street rose nearly 1 percent, with the S&P 500
approaching all-time highs. MSCI's 46-country All
World index up 0.9 percent at its highest in almost two weeks
.MIWD00000PUS .
The advance on Wall Street tracked European and Asian
markets. London's FTSE .FTSE rose 0.5 percent but was off
earlier highs. Germany's DAX .GDAXI and France's CAC 40
.FCHI rose around 1 percent. In Tokyo, the Nikkei .N225
closed up 1.1 percent.
With the polls still tight and having proved unreliable in
Britain's general election last year, caution remained, however.
"Everybody is a bit shell-shocked at the way the market has
moved so aggressively (towards Britain remaining in the EU),"
said Saxo Bank's head of FX strategy John Hardy.
"If you are stuck with a short position, you are being
forced out without even knowing the result, but what this also
means is that a Brexit result is now a catastrophic risk."
(Latest Reuters news on the referendum, including full
multimedia coverage: SO VOLATILE TIMES
Before the British vote, exchanges, market regulators and
banks moved to tighten risk-management systems.
Singapore's stock exchange SGXL.SI has raised the amount of
cash companies must pledge to cover trading positions Central
banks have said they stand ready to pump in emergency cash.
"Most people at this point expect a rise in the market,"
anticipating Britain will vote to stay in the EU, said Isao
Kubo, an equity strategist at Nissay Asset Management. "But you
never know, and it will be clear by tomorrow, so you don't want
to take new positions now."
Safe-haven government bond prices edged lower, pushing up
yields. Ten-year German bonds yielded 0.09 percent DE10YT=TWEB
and U.S. Treasury yields rose to 1.73 percent US10YT=RR .
The bullish tilt was reflected elsewhere. The main U.S.
stock market "fear-gauge", the VIX volatility index .VIX ,
dropped the most in 5 months. Safe-haven gold XAU= fell to a
two-week low of $1,256.81 an ounce before cutting some of those
losses.
Demand also faded for another safe haven, the yen. The
dollar jumped more than a full yen to 105.76 yen JPY= and the
euro gained more than 2.4 percent to 120.28 yen in its biggest
jump since December EURJPY= .
The euro zone currency also climbed against the dollar,
briefly breaking $1.14 EUR= and trading up 0.7 percent to
$1.137. That pushed the dollar index, which tracks the U.S.
currency against six rival currencies, down 0.4 percent. .DXY .
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Global assets in 2016 http://reut.rs/1WAiOSC
Currencies in 2016 http://link.reuters.com/tak27s
Reuters' new Live Markets blog on European and UK stock markets
reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
Interactive Brexit graphic http://tmsnrt.rs/1Ke31HF
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>