(Adds comments, updates trading)
* Technology stocks rally on divided Congress outlook
* Final result might not be known for a days or weeks
* Dollar gains, 10-year Treasury yields plummet
* Gold retreats, oil adds to gains
* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
By Herbert Lash and Marc Jones
NEW YORK/LONDON, Nov 4 (Reuters) - The dollar rose and world
equity markets rallied on Wednesday as investors bet a
progressive "Blue Wave" Democratic agenda of heavy fiscal
spending and more regulation was unlikely amid an unclear
outcome following the U.S. presidential election.
The dollar jumped more than 1% after President Donald Trump
won Florida early in the day as investors grasped that
Democratic Party control of Congress was not in the cards even
if former vice president Joe Biden wins the presidential race.
Biden extended his narrow lead in Michigan while maintaining
a slight edge in Wisconsin, according to Edison Research.
Trump, who falsely claimed victory and made unsubstantiated
allegations of electoral fraud, won the two pivotal battleground
states in 2016. Officials from each campaign insisted their candidate would
prevail in the fight for 270 Electoral College votes needed to
win the White House.
But Republicans were likely to retain control of the Senate
and effectively halt any major change in taxes, regulation or
spending.
Growth stocks pushed the major indexes on Wall Street
sharply higher on the notion that a divided Congress would curb
efforts to tax the big U.S. technology heavyweights.
"That decisive Blue Wave doesn't look like it's going to
happen, and I think that markets are comfortable, perhaps, even
if Biden wins," said Michael Arone, chief investment strategist
at State Street Global Advisors in Boston.
"Investors have headed back to their security blankets," he
said. "Reliable growth technology companies, 10-year Treasuries
are rallying, a pivot toward safety and the U.S. dollar."
MSCI's benchmark for global equity markets .MIWD00000PUS
rose 2.44% to 581.97, while the pan-European FTSEurofirst 300
index .FTEU3 closed up 2.1% at 1406.62.
On Wall Street, the Dow Jones Industrial Average .DJI rose
2.58%, the S&P 500 .SPX gained 3.11% and the Nasdaq Composite
.IXIC added 4.14%.
(For the latest results and news on U.S. election, click: https://www.reuters.com/world/us-election2020)
But the dollar will weaken next year as a divided Congress
will likely force the Federal Rerve to do more in the coming
months to help the economy to recover, said Edward Moya, senior
market analyst at OANDA in New York.
"You're probably going to see that the dollar decline will
still take place, it just won't be as accelerated as with what
would have happened with a blue wave," he said.
The dollar index =USD rose 0.397%, with the euro EUR=
down 0.02% to $1.1709. The Japanese yen JPY= weakened 0.10%
versus the greenback at 104.58 per dollar.
Long-dated U.S. Treasury yields, which had climbed to
multi-month highs ahead of the election results, plummeted when
the likelihood of a Democratic sweep that had been priced into
the market faded. Yields on the benchmark 10-year U.S. Treasury US10YT=RR
note fell 10.0 basis points to 0.7813%.
Stéphane Monier, chief investment officer at Lombard Odier,
said a divided Congress would have "far-reaching implications
for markets, mostly because it means that any kind of pandemic
recovery package is still tough to approve".
TOO CLOSE TO CALL
In Asia, Japan's Nikkei .N225 finished 1.7% higher, while
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS edged up 0.4%.
Chinese blue chips .CSI300 rose 0.7%, with markets
uncertain how Sino-U.S. relations would develop.
Emerging market currencies pinballed. The Mexican peso
MXN= recovered from a 2% tumble taken when the sudden chance
of a Trump victory sparked nerves about U.S. trade policies
continuing to favour tariffs.
Norway's crown NOK= , Australia's risk-sensitive dollar
AUD=D3 and Britain's pound GBP=D3 were all fighting back
too, China's yuan spun to hit a 2-week high while the Russian
rouble RUB= , which had been one of the hardest decliners in
the election run-up, gave back overnight gains. EMRG/FRX
Gold had been buoyed by the extensive liquidity but ran into
profit-taking, losing as much 1% to $1,887 an ounce.
Spot gold prices XAU= fell 0.79% to $1,893.22 an ounce.
Oil prices rose more than 3%, lifted in part as data showed
a large decline in U.S. crude inventories.
Brent crude futures LCOc1 rose $1.30, to $41.01 a barrel.
U.S. crude futures CLc1 gained $1.24, to $38.9 a barrel.
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Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
Key emerging currencies being split by U.S. election https://tmsnrt.rs/326Toa7
Global markets since Trump's election https://tmsnrt.rs/3jNwnis
World stocks market cap rise over last four years https://tmsnrt.rs/2TL19hh
S&P 500 futures take a wild ride https://tmsnrt.rs/3k13Sxz
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