NEW YORK (REUTERS) - Stocks across the globe posted their biggest decline in a month on Monday (Oct 26) as surging coronavirus cases in Europe and the United States clouded the world economic outlook, giving the US dollar a safe-haven boost.

The United States, Russia and France set new daily records for coronavirus infections as a resurgence of the virus swelled across parts of the Northern Hemisphere, forcing some countries to impose new curbs.

The spreading pandemic, along with lack of progress on a US stimulus package and caution ahead of the Nov 3 US presidential election, dragged down the MSCI world equity index .

"It's almost entirely Covid-related. We thought all along that the most important factor for the market, good or bad, is Covid and it's bad (today) because cases are rising," said Christopher Grisanti, chief equity strategist at Mai Capital Management in Cleveland.

"The administration has come out and said it does not want to slow down the economy, yet as cases rise they may not have a choice. So the administration is in a difficult position."

The Dow Jones Industrial Average fell 650.19 points, or 2.29 per cent, to 27,685.38, the S&P 500 lost 64.42 points, or 1.86 per cent, to 3,400.97 and the Nasdaq Composite dropped 189.35 points, or 1.64 per cent, to 11,358.94.

The pan-European STOXX 600 index lost 1.81 per cent and MSCI's gauge of stocks across the globe shed 1.52 per cent.

MSCI's gauge of stocks globally hit a record high in September and brushed against it earlier this month.

Emerging market stocks lost 0.51 per cent. Japan's Nikkei futures fell 0.57 per cent.

Sentiment was also hit by a survey showing German business morale fell in October for the first time in six months.

As markets increasingly price in the likelihood of a Democratic president and Congress which would likely result in a rise in government spending and borrowing, US 10-year Treasury yields hit their highest since early June last week at 0.872 per cent.

"We have raised the probability of a Democratic sweep, already our base case, from 40 per cent to just over 50 per cent and have increased our expectation of (Democratic presidential candidate) Joe Biden to win from 65 per cent to 75 per cent," NatWest Markets analysts said. "We see steeper US yield curves and a weaker USD as likely to prevail in our base case." Benchmark 10-year notes last rose 11/32 in price to yield 0.8044 per cent, from 0.841 per cent late on Friday.

BlackRock Inc, the world's largest asset manager, on Monday downgraded US Treasuries and upgraded their inflation-linked peers ahead of the US election.

Despite encouraging news about a Covid-19 vaccine out of Oxford, surging coronavirus cases sent investors to the safety of the dollar.

"Skittish investors are scooping up the greenback as virus cases accelerate around the world, stimulus talks in Washington remain in limbo, and trepidation is on the rise ahead of America's presidential election," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.

The dollar index rose 0.286 per cent, with the euro down 0.45 per cent to US$1.1806.

The Japanese yen weakened 0.09 per cent versus the greenback at 104.84 per dollar, while sterling was last trading at US$1.3021, down 0.15 per cent on the day.

In commodity markets, spot gold added 0.1 per cent to US$1,902.02 an ounce. Silver fell 1.16 per cent to US$24.29.

Oil prices extended last week's losses. OPEC's secretary general said an oil market recovery may take longer than hoped as coronavirus infections rise worldwide, and OPEC and its allies would "stay the course" in balancing the market.

US crude fell 3.21 per cent to US$38.57 per barrel and Brent was at US$40.46, down 3.14 per cent on the day.