* Pound surges 1 percent as govt loses Brexit ruling
* Eases tension in markets gripped by U.S. election
* Wall Street set to open higher, break losing streak
* Egypt stocks, bonds surge as Cairo floats currency (Recasts and writes through)
By John Geddie
LONDON, Nov 3 (Reuters) - The pound jumped on Thursday after a UK court ruled that parliament must approve a government decision to trigger Brexit, lifting European stocks and bond yields and easing tension in markets rattled by U.S election nerves.
Sterling topped $1.24 for the first time in three weeks GBP=D4 , climbing more than 1 percent against the dollar, which has been knocked by uncertainty about what a Donald Trump presidency might mean for economic policy, free trade and geopolitics.
The decision by England's High Court appeared to offer hope to investors who worry Prime Minister Theresa May's cabinet is set on a "hard" exit from the EU prioritising immigration controls over free trade, which might be tempered by a stronger influence from other lawmakers.
The UK government will appeal the ruling in a hearing in early December.
European stocks .FTEU3 , which touched a near four-month low in early trade after some polls put Republican Trump ahead of Democrat Hillary Clinton, climbed following the UK court decision. They were up 0.4 percent on the day, while bond yields rose as investors showed less demand for safe haven assets.
"The market became more 'risk-on' after the verdict because it increases the chances of a soft Brexit, as the parliament will push the government to keep access to the single market to the largest extent possible, which is positive for the UK economy," said Mizuho rates strategist Antoine Bouvet.
Wall Street ESc1 was set to open slightly higher, with the
S&P 500 set to break its longest losing streak in five years. It is just one more session away from its worst run since 2008.
The broader picture remains weak though with the MSCI world equity index .MIWD00000PUS , which tracks shares in 46 countries, languishing close to a four-month low. Asian shares also lost some ground overnight .MIAPJ0000PUS .
The .VIX volatility index, also known as markets' fear gauge, fell after seven straight days of rises.
Investors have been unsettled by media reports that some agents at the FBI had wanted to press ahead with an investigation of the Clinton Foundation, the latest twist in a long-running investigation into her use of a private email server while she was secretary of state.
The dollar recovered most of its early losses, and was only 0.1 percent down against a basket of major currencies .DXY .
The focus was firmly on sterling though with the Bank of England's policy decision and inflation report also due on Thursday.
TIGHTENING CYCLE
An average of polls compiled by the RealClearPolitics website showed Clinton retaining a slight lead. A Reuters/Ipsos daily tracking poll released late on Wednesday showed her ahead by 6 percentage points among likely voters.
Politics also overshadowed the Fed's November policy meeting at which it kept rates steady as expected and opened the door a little wider to a rate rise next month.
"Barring a shock to the global economy and/or upheaval in financial markets, we continue to anticipate a 25 basis point rate hike at the 14 December meeting," said Peter Dragicevich, a senior currency and rates strategist at CBA.
"We, and the FOMC, are looking for the tightening cycle to continue to be slow and limited," he added, predicting two more rate increases over 2017.
Oil rose, lifting prices away from five-week lows as an attack on a Nigerian oil pipeline raised concerns about supply disruptions.
Helped also by the weaker dollar, U.S. crude CLc1 bounced 39 cents to $45.73 a barrel, while Brent LCOc1 added 45 cents to $47.31.
In emerging markets there were major moves as Egypt floated its currency, the Egyptian pound, in a move that resulted in a near 33 percent devaluation. stocks and bonds both surged with Cairo's blue chip equity index .EGX30 up 8.3 percent in the opening minutes and its main dollar-denominated government bonds rallying as much as 2.2 cents in the dollar.
"The dollar bonds are understandably up as they won't be frittering reserves anymore," said head of EM sovereign debt at Aberdeen Asset Management Edwin Gutierrez.
"But this was part of the IMF programme. It is classic Washington consensus 101, and they are doing all the right things."