* Nikkei hits 1-month high after LDP retains majority in Japan

* Watershed week for monetary policy, led by Fed

* U.S. dollar holds Friday gains; Treasury yields a bit higher

By Tom Westbrook

SINGAPORE, Nov 1 (Reuters) - Stocks edged higher on Monday, led by a post-election jump in Japan's Nikkei, though bonds wobbled and the dollar firmed as traders braced for central bank meetings in Britain, Australia and the United States to define the rates policy outlook.

Japan's Nikkei rose 2.3% to a one-month high after Prime Minister Fumio Kishida's Liberal Democratic Party did better than expected at Sunday's election, with exit polls showing the party easily retaining a majority.

Trade elsewhere was more muted, with MSCI's index of Asia-Pacific shares outside Japan up marginally. Weekend data showing a sharper-than-expected contraction of Chinese factory activity weighed on the mood.

S&P 500 futures rose 0.3%.

The Fed is the highlight of a week full of central bank meetings likely to move markets, with policy adjustments possible at the Bank of England and Reserve Bank of Australia, as inflation puts upward pressure on the rates outlook.

The Fed, which concludes a two-day meeting on Wednesday, is expected to say it will start to taper bond purchases, though markets' focus is on clues about rates lift-off.

Fed funds futures are pricing hikes beginning early in the second half of 2022 and Goldman Sachs on Friday pulled forward its hike forecast to July from Q3 2023.

"While maintaining the view that most of the inflation we are seeing will prove transitory, a risk management mindset has taken over, and developed market central banks are now changing tack," analysts at Goldman Sachs said in a late-Friday note.

"The Bank of England looks likely to raise rates (and) the Reserve Bank of Australia appears to have abandoned its yield curve peg ... our U.S. economists now expect the Federal Reserve to start raising rates in July 2022, compared to Q3 2023 previously."

BONDS ON EDGE

The prospect of higher rates sooner has roiled short-dated bonds around the world, straining liquidity in recent weeks, though Monday trade was a little calmer.

Two-year U.S. Treasury yields rose 2 basis points in Asia trade to 0.5227%. Benchmark 10-year yields rose 1.2 basis points to 1.5732%. October was the worst month in more than three-years for two-year Treasuries.

A bid crept back in to Australia's battered bond market despite the central bank again declining to defend its yield target. Three-year Australian government bond futures were last up 12.5 ticks at 98.720.