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UPDATE 2-Rebound in factory output lifts European stocks after selloff last week

(For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window)

* German stocks outperform on factory data

* UK midcaps hit by lockdown worries

* All eyes on U.S. presidential election

* BlackRock downgrades European equities as virus surges (Updates to market close)

Nov 2 (Reuters) - European stocks started November trading on a strong footing as a rebound in factory activity around the world outweighed worries over a resurgence in COVID-19 cases that is driving major economies in the continent back into a lockdown.

The exporter-heavy German DAX index jumped 2.0% as a survey showed factories in Europe’s largest economy saw record growth in new orders in October, with numbers improving in other euro zone economies as well.

Similar sets of data from China and the United States also pointed to a strong rebound in manufacturing activity, boosting cyclical sectors such as oil & gas, banks and insurers and chemical companies in Europe.

Wall Street stocks also gained momentum as investors prepared for the U.S. election, with Democratic challenger Joe Biden leading over Republican President Donald Trump in national opinion polls, but the race looks close in battleground states.

“Compared to the status quo if Trump were to secure a second term, a Biden win and Democratic sweep could be perceived as more beneficial to Europe,” Barclays’ European equity strategist Emmanuel Cau said in a note.

“This is due to possibly reduced trade uncertainty, stronger ties with the U.S. and greater stimulus lifting the reflation trade.”

Morning trading was hit by a tech glitch, with the pan-European STOXX 600 and STOXX 50 indexes failing to show opening prices due to “input data problems”, index operator Qontigo told its clients.

The indexes were back online an hour after the open, with the STOXX 600 rebounding 1.6% from a five-month low hit last week.

London’s domestically exposed midcap index slipped 0.2% after Prime Minister Boris Johnson announced new restrictions to curb the coronavirus across England that would kick in after midnight on Thursday and last until Dec. 2.

Europe’s main regional indexes tumbled to multi-month lows last week after Germany and France imposed nationwide lockdowns and several other countries tightened coronavirus restrictions to limit the spread of the virus.

The latest round of curbs drove U.S. banks Goldman Sachs and Morgan Stanley to cut Europe’s fourth-quarter economic forecasts, while BlackRock, the world’s largest asset manager, downgraded European equities to “neutral.”

Among individual stocks, Italy’s biggest payments group Nexi slipped 2.6% after saying that it was in exclusive merger talks with Denmark’s Nets over a potential $8 billion tie-up.

British online supermarket and technology group Ocado jumped 8.0% after saying that it would buy two robotics companies and upgraded its full-year earnings outlook. (Reporting by Sruthi Shankar in Bengaluru; editing by Uttaresh.V, Shailesh Kuber and Susan Fenton)

Nuestros Estándares: Los principios Thomson Reuters.

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