(Adds close of U.S. markets)
* U.S. tech stocks rally on divided Congress outlook
* Final result might not be known for 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 that a
progressive "Blue Wave" Democratic agenda of heavy fiscal
spending and more regulation was unlikely as the outcome of the
U.S. presidential election remained unclear.
The dollar jumped more than 1% early on Wednesday after
President Donald Trump won the major battleground state of
Florida, leading investors to believe Democratic Party control
of Congress was not in the cards even if former vice president
Joe Biden winds up winning the White House. Biden extended his narrow lead in Michigan while maintaining
a slight edge in Wisconsin, according to Edison Research. CNN
and the Associated Press projected Biden would win the state.
Trump, who falsely claimed victory and made unsubstantiated
allegations of electoral fraud, won both of the 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 presidency.
But Republicans were likely to retain control of the Senate
after Senator Susan Collins scored a surprise re-election
victory in Maine, which would effectively forestall 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."
Stocks surged, with MSCI's benchmark for global markets
posting its biggest daily percentage gain since mid-June. The
gauge of equity performance in 49 countries .MIWD00000PUS rose
1.94% to 579.09, and the pan-European FTSEurofirst 300 index
.FTEU3 closed up 2.1% at 1406.62.
On Wall Street, the Dow Jones Industrial Average .DJI rose
1.34% and the S&P 500 .SPX gained 2.20%. The Nasdaq Composite
.IXIC added 3.85% - the biggest daily percentage gain since
mid-April.
(For the latest results and news on U.S. election, click: https://www.reuters.com/world/us-election2020)
The dollar will weaken next year as a divided Congress will
likely force the Federal Reserve to do more in the coming months
to help the economy 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 0.385%, with the euro EUR= up
0.03% to $1.1714. The Japanese yen JPY= weakened 0.05% versus
the greenback at 104.53 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. "Yesterday afternoon the market was probably pricing in
about a 70%-75% chance of a Dem sweep," said Michael de Pass,
global head of U.S. Treasury trading at Citadel Securities.
"As Trump won Florida and you realized this was going to be
a bit of a close race and not a landslide, the tone changed
very, very quickly," de Pass said.
Yields on the benchmark 10-year U.S. Treasury US10YT=RR
note fell 11.0 basis points to 0.7713%.
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 when the sudden chance of a
Trump victory sparked nerves about U.S. trade policies
continuing to favor 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 $1,883 an ounce.
U.S. gold futures GCv1 settled down 0.7% at $1,896.20.
Oil prices rose almost 4% as it is unlikely for U.S. gas and
oil incentives to be removed in a split Congress and as data
showed a large decline in U.S. crude inventories.
Brent crude futures LCOc1 rose $1.52 to settle at $41.23 a
barrel. U.S. crude futures CLc1 settled up $1.49 to $39.15 a
barrel.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
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
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>