* Stimulus hopes boost U.S. stocks
* Dow Jones Industrial Average up 0.9%; S&P 500 up 1.0%
* European indexes hit by new Covid restrictions
* Gold higher, dollar falls for second day
By Matt Scuffham
NEW YORK, Oct 20 (Reuters) - U.S. equities rallied on Tuesday, fed by investor optimism that a deal would be agreed in Washington to provide new relief measures and help the U.S. economy withstand the impact of the coronavirus pandemic.
Gold edged higher and the dollar weakened as hopes for a U.S. coronavirus aid package ahead of the presidential election boosted bullion's appeal as an inflation hedge.
President Donald Trump on Tuesday pushed for a comprehensive COVID-19 relief package, saying he would accept a deal worth more than $2.2 trillion despite opposition to large spending measures among his fellow Republicans in the U.S. Senate. spoke as talks between House of Representatives Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin approached a Tuesday deadline for reaching a bipartisan deal that could pass Congress before Election Day on Nov. 3.
"I think there's still that belief that stimulus is going to happen," said Ed Moya, senior market analyst at OANDA, adding that he remained skeptical.
The Dow Jones Industrial Average .DJI was up 249.70 points, or 0.89%, at 28,445.12 and the S&P 500 .SPX was up 33.38 points, or 0.97%, at 3,460.30. The Nasdaq Composite .IXIC was up 98.53 points, or 0.86%, at 11,577.41.
Shares in Procter & Gamble Co rose 2% as coronavirus-driven home cleaning pushed sales of the consumer goods giant's home care products as much as 30% higher. stocks fell as worries about coronavirus curbs and Brexit countered optimism generated by strong earnings, including from Swiss bank UBS. Spain and Britain imposed curbs to limit the spread of new coronavirus cases that threaten to derail a budding economic recovery. The latest curbs in Ireland will see GDP fall by 3.5% this year, Finance Minister Paschal Donohoe said.
The pan-region STOXX 600 .STOXX has recovered about 35% from a pandemic-panic plunge in March, but is struggling to reach pre-crisis levels, plateauing as the second-wave of the disease grips. On Tuesday, the index closed down 0.35%.
The European Union and Britain struggled to make progress on a trade deal to avoid a fast-approaching disruptive finale to the five-year drama of Britain's departure from the EU. rose against the dollar but fell versus the strong euro, with investors still searching for clues on how likely it was that Britain would reach a trade deal with the European Union by the end of the year.
The British government has said it sees no basis to restart the talks with the European Union unless there is a fundamental change in approach. pound was up 0.2% at $1.2968 GBP=D3 , while against the euro it was down 0.4% at 91.26 pence EURGBP=D3 , having slipped earlier to a two-week low of 91.48 pence.
The dollar dipped, but moves were muted as investors awaited the outcome of stimulus talks.
The dollar index =USD declined 0.31%, putting it on track for a second day of declines.
Spot gold XAU= rose 0.4% to $1,912.71 per ounce. U.S. gold futures GCv1 settled up 0.2% at $1,915.40.
Oil edged up on stimulus hopes, but the threat to demand from rising coronavirus cases worldwide and increased Libyan output kept prices from moving higher.
Brent crude LCOc1 futures settled up 1.15% at $43.11 a barrel. U.S. West Texas Intermediate (WTI) crude CLc1 futures settled 1.54% higher at $41.46 a barrel.
Overnight, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dropped 0.2%, while Australian .AXJO and Japanese .N225 markets dipped.
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http://tmsnrt.rs/2EmTD6j GRAPHIC-Global assets in 2020
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