LONDON, Oct 11 (Reuters) - The U.S. presidential

election, the most consequential vote for financial markets in

an election-packed year, is weeks away.

With Democratic Vice President Kamala Harris and Republican

Donald Trump locked in a close race to win the Nov. 5 election,

we look at what matters most for world markets.

EUROPE IN THE BALANCE

For European equity markets, a Trump victory could spell

trouble for export-heavy sectors, particularly German automakers

such as BMW but also LVMH and other luxury

goods makers as concerns of renewed trade tensions loom.

Barclays has warned of possible "high single-digit"

percentage drops in European earnings should trade conflicts

reignite. Trump has floated plans for blanket tariffs of 10-20%

on virtually all imports to boost U.S. manufacturing.

On the flip side, a Harris win would be a relatively better

outcome for European equities. This could energize renewable

energy, a possible tailwind for utilities with large U.S.

projects like Orsted and Iberdrola.

Over the longer term, however, her plans to raise corporate

taxes from 21% to 28% could curb margins for American firms and

European dollar earners alike. A further cut under Trump would

likely be welcomed on both sides of the Atlantic.

The election could have implications for the war in Ukraine.

Trump and some Republicans in Congress have questioned the value

of U.S. funding for Ukraine's two-year battle against Russia,

while Democrats have pushed to bolster Ukraine.

Aerospace and defense stocks have gained over 80%

since Russia invaded Ukraine in 2022.

CURRENCY SWINGS

Trade tariffs are key for traders in the world's

most-actively traded currencies.

The euro, trading below September's 14-month peaks at around

$1.09, is seen as being in the losing camp if a Trump

win means higher universal tariffs.

"A Trump win, in the eyes of the market, would take

euro/dollar down to the $1.05 area, whereas a win for Harris

would see the rate move in the opposite direction, above $1.15,"

said BlueBay Asset Management CIO Mark Dowding.

Geopolitical risks, especially in the Middle East, that

trigger a surge in oil prices and hurt economic growth, also

make the euro vulnerable, analysts said.

ING added that a Trump win could also hurt the Australian

and New Zealand dollars -- currencies of economies dependent on

trade from China, a main target of higher tariffs. Around 37% of

Australia's and 29% of New Zealand's exports land in China, ING

noted.

The Swedish and Norwegian currencies were also seen as

vulnerable to global trade dynamics, while Canada's dollar could

suffer if a Harris win is viewed negatively for the U.S.

economy.

CHINA ROULETTE

One of the highest stakes gambles in global markets right

now is whether to place bets on China, where government stimulus

pledges have revived investor interest that could be canceled

out by tariff hikes or trade wars under Trump.

Investors expect Harris to pursue targeted tariffs and Trump

to lean towards more aggressive, disruptive policies.

"If Trump wins, the (political) rhetoric towards Chinese

companies would be terrible," Edmond de Rothschild international

equities manager Christophe Foliot said.

That would likely increase China scepticism among U.S.

investors and intensify a trend for multinationals to remove

made-in-China components from their supply chains, he added.

China faces further hits from a Trump administration

potentially cutting Chinese companies' access to new

technologies, which would limit productivity, Oxford Economics

said.

And risk consultancy Eurasia Group said a Trump victory

would pressure EU nations to also decouple from China.

Goldman Sachs strategists estimate that Chinese stocks could

fall by 13% if Trump levies a 60% tariff on Chinese goods.

But threats of an export slump may also motivate Beijing to

follow up monetary stimulus with more significant state spending

programmes.

"Potential new U.S. tariffs on Chinese goods might increase

the intensity and longevity (of stimulus)," Goldman said.

EM ON THE LINE

Emerging market (EM) equities are, on paper, ready to shine

after underperforming their developed-world peers for the better

part of a decade. The U.S. Federal Reserve has kicked off rate

cuts and the dollar, food and fuel prices are falling - big

boosts for importing countries.

Investors say that a Harris win, signaling broad policy

continuity from President Joe Biden, could give the assets a

tailwind.

But a Trump win, accompanied by global tariffs, could come

down hard on any excessive optimism. Most investors say Mexico,

with strong U.S. trade ties, has the most to lose; those betting

on a Trump win often turn on Mexico's peso.

JPMorgan warned investors to stay neutral until the U.S.

election risk has passed, and UBS warned that the highest Trump

tariffs threaten losses of up to 11% for EM equities in 2025.

The Swiss bank also said that its EM Risk Appetite index is

near 15-year highs, suggesting investors are not fully pricing

in the downside risk of Trump tariffs to EM assets broadly.