UPDATE 2-European stocks swing to gains as U.S. election race tightens

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* European stocks erase sharp losses

* Biden trade unwinds as Trump leads in swing states

* Healthcare stocks gain sharply (Adds comment, updates prices)

Nov 4 (Reuters) – European stocks crept higher after early losses on Wednesday as U.S. President Donald Trump took the lead over Democratic rival Joe Biden in a number of vital swing states, making the race for the White House too close to call.

After falling as much as 1.3% at one point, the pan-European STOXX 600 index edged up 0.1%, while the German DAX shed 0.4% and UK’s FTSE gained 0.1%.

Trump won the battleground of Florida, but Biden voiced confidence he would win the election by taking three key Rust Belt states, although the vote-counting could stretch for hours or days there.

Adding to uncertainty, Trump falsely claimed that he had won the U.S. election, with millions of votes still uncounted, and said he would go the U.S. Supreme Court to fight for the win if needed.

“While it may not come as a complete surprise to the markets, delays and/or lack of a clear result prolongs uncertainty, and raises the possibility the result will be legally disputed,” Barclays equity strategist Emmauel Cau said.

Money managers had bet on a clear victory for Biden in the election, boosting European equities in the run-up to the election, as investors anticipated better trade ties with Washington and more economic stimulus for the coronavirus-hit U.S. economy.

Banks, oil & gas and mining stocks fell more than 1.5% after leading a surge in markets this week as investors unwound bets of a Biden sweep that could support the growth-sensitive sectors.

Trade-exposed auto stocks also fell 1.2%, but the defensive healthcare sector jumped 2.7%.

European equities, which lean on such “value” stocks, trade at a record low relative to Wall Street indexes heavy on “growth” sectors like technology.

New York’s S&P 500 futures rose 0.5% after volatile trading overnight, while those in the tech-heavy Nasdaq gained 2.4%.

Among individual movers, German automaker BMW fell 2.2% after it warned a new wave of coronavirus infections sweeping Europe and the United states posed a “considerable” risk to its business.

Britain’s Marks & Spencer jumped 4.7% despite reporting the first loss in its 94 years as a publicly listed company.

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