* FBI lifts email cloud over Clinton campaign
* Mexican peso rallies
* Gold, bonds sag (Updates with European market close)
By Chuck Mikolajczak
NEW YORK, Nov 7 (Reuters) - Stock markets across the globe rallied on Monday, along with the U.S. dollar, putting them on track for their biggest gains in weeks after the FBI stood by its view that no criminal charges were warranted against Hillary Clinton over her email practices.
The news lifted a cloud over the Democrat’s presidential campaign and gave it new momentum before Tuesday’s U.S. election, sending the benchmark S&P 500 index up more than 2 percent. The index was on pace to snap a nine-day losing skid, its longest in more than 35 years, and to post its best daily performance in over eight months.
European stocks jumped and many of the safe-haven assets that had performed strongly last week, when polls showed Republican candidate Donald Trump closing the gap with Clinton, reversed course. Gold and U.S. Treasury bond prices fell.
Investors had been unnerved in recent days by signs of a tightening U.S. presidential race, evidently preferring what is seen as a known quantity in Clinton, over the political wild card, Trump.
“People started to freak out a little bit that we were either going to have a real unknown in the White House in Trump or we were going to have someone indicted in the White House - and neither solution was going to be good for the market,” said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.
“The fact the FBI backtracked here and sort of waved the all clear sign, reduced that fear of a Clinton indictment.”
The Dow Jones industrial average was up 352.08 points, or 1.97 percent, to 18,240.36, the S&P 500 gained 43.74 points, or 2.1 percent, to 2,128.92 and the Nasdaq Composite added 118.73 points, or 2.35 percent, to 5,165.10.
MSCI’s all-country world index rose 1.5 percent and was on pace for its best day since June 29. The index had closed at a four-month low on Friday.
Europe’s index of the leading 300 shares closed 1.7 percent higher, its strongest rally in nine weeks, with a 2.9 percent rise in financials leading the way.
One of the biggest winners was the Mexican peso, which has been a market proxy for sentiment over the U.S. election and has performed in inverse correlation with Trump’s perceived chances of winning the White House.
The Republican candidate’s proposed policies are considered a negative for Mexico’s economy. The currency rose as much as 2.55 percent to a 1-1/2 week high of 18.5457 per dollar.
The dollar jumped 0.73 percent against a basket of currencies after a 1.3 percent drop last week.
The shift in sentiment was reflected by the steep fall in anticipated market volatility. The VIX index, also known as Wall Street’s “fear gauge,” was on track to post its biggest one-day fall in over four months and was poised to snap a nine-day stretch of gains.
Gold, which also rose every day last week to a one-month high above $1,300 an ounce, fell 1.8 percent, its biggest drop since Oct. 4, to $1,280.26.
Bond prices retreated as risk appetite surged across the board. Benchmark 10-year notes were down 13/32 in price to yield 1.8296 percent, up from 1.783 percent late on Friday.
Reporting by Chuck Mikolajczak; Editing by Bernadette Baum and Dan Grebler