* Malaysia stocks fall 1% as central bank, budget loom * U.S. election on November 3 fuels caution * China, South Korea factory activity expand in October Nov 2 (Reuters) - Malaysian stocks hit their lowest in more than five months on Monday as political uncertainty remained high ahead of a central bank meeting and the country's budget, while Asia's other emerging markets kept to tight ranges. Factory activity in South Korea and China showed a robust recovery in October with shares in Seoul up 1%, the most in the region, while Shanghai dipped ahead of the U.S. election. Traders face a busy week as a surge in COVID-19 cases sends many European countries back into lockdown, threatening further economic pain for the global economy, while the prospect of a contested U.S. election on Tuesday could lead to days, if not weeks, of uncertainty. OCBC analyst said Asian markets face a mixed start to the week from "potentially whippy action as investors remain nervous about the upcoming U.S. election results." The election could open the door to friendlier U.S. trade and foreign policy to some if Democratic candidate Joe Biden wins, potentially dialling back tensions with China, the world's second-largest economy and key driver for the region. In Kuala Lumpur, stocks fell as much as 1%, while the ringgit was flat. On Tuesday, Malaysia's central bank is expected to leave its policy rate unchanged and on Friday the government will present its first budget focussed on tackling the pandemic's fallout. Over the weekend, Malaysia's prime minister urged lawmakers to pass the 2021 budget, in spite of efforts by the opposition to oust his government and pressure from unhappy partners within the governing coalition. "The upcoming budget has become a contentious political issue," ING said in a note, with the prospect of the budget not passing fuelling fears of yet another political crisis. Currencies in the region also stuck to tight ranges ahead of the U.S. election, with the Chinese yuan up 0.1%, while Indonesia's rupiah dipped 0.2%. Biden leads polls nationally, but faces a tighter contest from Republican President Donald Trump in battleground states that will eventually decide the outcome. "Even a small decline in Biden's probability of winning – in the event of delay in being able to call the election, with or without the prospect of a contested result – could evince an outsized reaction in Asian FX," analysts at Deutsche Bank said, pointing to dollar gaining. Markets in the Philippines were closed for a public holiday. HIGHLIGHTS: ** Malaysia's 10-year benchmark yield up 0.4 basis points to 2.625% ** Top losers on Bursa Malaysia include Top Glove Corp Bhd, Dialog Group Bhd and Sime Darby Bhd ** Wilmar International jumps 5% in Singapore after reporting strong third-quarter results on Friday Asia stock indexes and currencies at 0346 GMT COUNTRY FX RIC FX FX INDEX STOCKS STOCKS DAILY % YTD % DAILY % YTD % Japan -0.02 +3.77 1.42 -1.49 China +0.06 +4.10 -0.05 5.66 India +0.00 -3.67 0.00 -4.32 Indonesia -0.20 -5.26 -0.15 -18.71 Malaysia -0.02 -1.52 -0.76 -8.37 Philippines - +4.51 - -19.08 S.Korea +0.03 +1.90 1.01 4.20 Singapore -0.07 -1.65 0.62 -24.32 Taiwan +1.12 +5.25 -0.32 4.24 Thailand +0.00 -4.01 0.02 -24.35 (Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Lincoln Feast.)
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