* Global stocks up 1 percent, Europe gains 0.5 percent
* Investors expecting rate cuts from ECB, BoE, RBA
* Dollar, yen weaker as high yielders gain
By Jeremy Gaunt, European Investment Correspondent
LONDON, Nov 3 (Reuters) - Global stocks kicked off a new month with solid gains on Monday against a background of easier monetary policy designed to pull economies away from severe recession.
The dollar and yen weakened, continuing a see-sawing trend that had followed the global appetite for stocks.
Investors have been cautiously shopping for bargains after shares and commodity prices globally in October posted their biggest decline ever on fears of a deep recession in the world economy.
MSCI's all-country world stock index lost 19.9 percent for the month, the largest monthly fall in the benchmark's 20-year history in its current form.
Reflecting the current volatility in markets, however, the index was up more than 11 percent last week, its best performance in the 20 years.
On Monday, the index was up nearly 1 percent with is emerging market counterpart gaining more than 2 percent.
"Given the massive scale of the reflation efforts we now see globally, be it in the form of rate cuts or fiscal packages, the odds of a more durable rally have increased, albeit that the bad news will not be over," said Gerhard Schwarz, head of global equity strategy at UniCredit in Munich.
Much of Monday's sentiment was driven by expectations of lower interest rates from central banks concerned about tumbling growth and tight lending markets.
The European Central Bank, the Bank of England and the Reserve Bank of Australia are all expected to lower rates this week to support their struggling economies.
They are all seen easing by at least 50 basis points. Last week, the U.S. Federal Reserve cut its key rate by 50 basis points to 1 percent and the Bank of Japan (BoJ) cut its rate to 0.30 percent from 0.50 percent.
Emerging giants China and India also cut rates last week.
"You saw action from the Fed, action from the Bank of Japan action from other central banks around the word ... so the expectation is high that the ECB will cut rates," said Heinz-Gerd Sonnenschein, equity strategist at Postbank in Bonn, Germany.
The pan-European FTSEurofirst 300 gained 0.8 percent. Japan's stock markets were closed for a holiday.
SEARCH FOR YIELD
The euro and other high-yielding currencies such as sterling gained against the dollar, while the yen retreated.
"The equity market seems to have stabilised and that is feeding through to improved sentiment for risky assets on the currency side," said Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi-UFJ.
High-yielders tumbled sharply last month as investors fled riskier assets and were forced to shed assets to raise funds, repatriated back into the dollar and yen. The euro saw its biggest monthly fall against the dollar and yen since the single currency's inception in 1999.
On Monday, however, the euro was up three-quarters of a percent at $1.2825 and up 1.5 percent at 127.26 yen.
Sterling was up 1 percent against the dollar at $1.6223 and the dollar was up 0.8 percent at 99.22 yen.
Euro zone government bond yields were little changed.
Two-year bond yields were up 1 basis point at 2.576 percent. Ten-year yields were 2 basis points lower at 3.876 percent. (Additional reporting by Rebekah Curtis; Editing by Victoria Main)