* FBI lifts cloud over Clinton campaign
* Stocks, dollar rally
* Gold, bonds sag
By Jamie McGeever
LONDON, Nov 7 (Reuters) - Stocks and the dollar posted their biggest gains in weeks on Monday after the FBI said it stood by a recommendation that no criminal charges were warranted against Hillary Clinton.
The news lifted a cloud over the Democrat’s presidential campaign two days before the U.S. election and put Wall Street firmly on track to snap a nine-day losing streak - its longest in more than 35 years.
Asian stocks excluding Japan rose 0.8 percent, European stocks were up almost 1.5 percent and U.S. futures pointed to a rise of 1.4 percent at the open. That would be the biggest rise in two months.
Many of the safe-haven assets that had performed so strongly last week when polls showed Republican candidate Donald Trump closing the gap turned the other way. Gold, bonds and the Swiss franc all fell on Monday.
Europe’s index of leading 300 shares rose 1.5 percent , the strongest rally in seven weeks, with a 2.5 percent rise in financials leading the way. Britain’s FTSE 100 and Germany’s DAX were up 1.6 percent.
MSCI’s broadest index of Asia-Pacific shares outside Japan advanced 0.8 percent, its biggest rise in three weeks. Japanese shares rose 1.2 percent, the biggest rise in seven weeks.
One of the biggest winners was the Mexican peso, which has acted as something of a bellwether of sentiment as Trump’s proposed policies are considered deeply negative for the country. It rose almost 2 percent to a 1-1/2 week high of 18.70 per dollar.
Investors had been unnerved by signs of a tightening presidential race.
Trump’s stance on foreign policy, trade and immigration has unnerved financial markets, while Clinton is seen as the status quo candidate.
The shift in sentiment was reflected by the steep fall in anticipated market volatility. The VIX index, dubbed the “fear index” of U.S. stocks, posted its biggest one-day fall in over four months. That followed a record stretch of nine consecutive daily increases.
“If Clinton wins we could see a continued recovery in risky assets like stocks and the Mexican peso. There could be another sell-off in gold and U.S. Treasuries, pushing up bond yields, which could also be dollar-positive,” said Kathleen Brooks, Research Director at City Index.
Gold, which also rose every day last week to a one-month high above $1,300 an ounce, fell 1.3 percent, its biggest drop in over a month, to $1,282.
The latest election news also allowed investors to shift some of their focus back to U.S. economic fundamentals, and the likelihood of an interest rate hike next month after a government report on Friday showed solid jobs gains and a rise in wages in October.
Bond prices retreated as risk appetite surged across the board. U.S. 10-year Treasury yields were up 3 basis points at 1.82 percent, benchmark euro zone yields were up 2 basis points at 0.15 percent and UK yields were up 3 basis points at 1.16 percent.
Bond yields were off earlier highs though. Although markets cheered the prospect of a Clinton win, they still carry scars from getting Britain’s referendum on leaving the European Union membership so wrong in June.
“Markets are edging towards Clinton largely because of polling and we saw in the Brexit referendum how wrong that can be,” said Luke Hickmore, senior fixed income fund manager at Aberdeen Asset Management.
“The memory of that referendum should loom large in investors’ memories because so much of the polling was wrong then.”
In the currency market, the dollar jumped 1.2 percent against the yen to 104.35 yen, its biggest rise in a month, while the euro dropped 0.7 percent to $1.1060.
The Swiss franc fell around 1 percent against the dollar to 0.98 per dollar, its biggest fall since late August.
Oil prices rose, with traders citing opportunistic buying following sharp declines in the previous week on weak fundamentals.
Brent crude oil futures were trading at $46.22 per barrel, up 1.4 percent. U.S. West Texas Intermediate (WTI) crude futures were up 1.7 percent at $44.80 a barrel.
Reporting by Jamie McGeever; editing by John Stonestreet