* Global equities stall as Obama wins U.S. election
* Asia stocks set 3-week high but European bourses retreat
* Wall St points to lower open, Dollar recovers lost ground
* Oil ebbs $3 a barrel as markets refocus on gloomy economy
(Updates with European markets, latest prices)
By Mike Dolan
LONDON, Nov 5 (Reuters) - European stocks retreated on
Wednesday, arresting six straight days of global equity gains
and offsetting Asia's early rally, as investors refocused on the
economic problems facing new U.S. president-elect Barack Obama.
The widely-expected victory for Democrat Obama was confirmed
by early results from Tuesday's U.S. presidential elections. The
news lifted Asia stocks almost two percent to three-week highs,
but European bourses lost more than two percent in early trading
and Wall St futures looked set to open lower.
Democrats increased their majorities in both houses of
Congress, but appeared to be falling short of picking up the
nine Senate seats needed to reach a 60-seat majority that would
give them the muscle to defeat Republican procedural hurdles.
Analysts said the results would now see investors take stock
of the new political and economic landscape after several days
in which global markets have recovered from the extreme of the
recent credit-related shock and stock indices across the global
have bounced more than 20 percent from October troughs.
While financial market tensions have eased considerably in
November, the global economic slowdown caused by this year's
intense banking crisis has yet to play out.
"The market is maybe reflecting the hard work ahead and
difficult economic circumstances new president Barack Obama has
inherited," said Keith Bowman, analyst at Hargreaves Lansdown.
Crude oil prices <CLc1> fell 4 percent on Wednesday and the
U.S. dollar <EUR=> recovered some of Tuesday's biggest one-day
loss against the euro since the latter's launch in 1999.
The October U.S. employment report on Friday will likely
highlight the economic challenge facing Obama, with forecasts of
non-farm payroll losses of up to a quarter of a million.
While global market movements were largely related to
position adjustments after a volatile few weeks, some analysts
focused on sectoral impacts.
"There's been a bit of profit taking after the fantastic
rise since the market bottomed out last week," said Jim
Wood-Smith, head of research at Williams De Broe in Exeter.
"Obama is seen as anti-big oil so the market is seeing
reason to take profit in oil majors."
This concern added to the pressure on energy stocks from the
drop in crude oil prices. BP <BP.L>, Royal Dutch Shell <RDSa.L>,
BG Group <BG.L> and Cairn Energy <CNE.L> all fell between 2.5
and 4.7 percent.
"In the last (few) days we have seen quite significant
gains, a breather is nothing surprising," said Tammo Greetfeld,
equity analyst at UniCredit in Munich in Germany.
MARKETS TAKE STOCK
By 1000 GMT, wold stock defined by the MSCI's global index
<.MIWD00000PUS> were down 0.2 percent. The pan-European
FTSEurofirst 300 <> index was down 2.3 percent, reversing
earlier gains across Asia <.MIAPJ0000PUS> that included a rally
of more tha 4 percent in Tokyo <>.
At 1000 GMT futures for the S&P 500 index <SPc1>, DJ
Industrial Average index <DJc1> and Nasdaq 100 index <NDc1> were
down 1.5-2.0 percent.
The financial crisis continued to loom large in Europe and
battered banks were the heaviest weight. BNP Paribas <BNPP.PA>
shed 2.6 percent after saying its third-quarter net profit more
than halved due to higher provisions tied to the upheavals.
HSBC <HSBA.L> lost 2.9 percent and BBVA <BBVA.MC> was 1.3
percent lower.
The new Obama administration, which takes office in January,
will face the world's worst financial crisis since the Great
Depression, and a potentially steep slowdown in global growth
that has pounded markets from Tokyo to Frankfurt to New York.
And the gloomy economic data stream was also relentless.
Service sector activity in the euro zone touched a fresh decade
low in October according to final data released on Wednesday.
The final Markit Eurozone Purchasing Managers' Index for
companies ranging from banks to cafes slumped to 45.8 -- the
lowest in the survey's 10-year history. That is well below the
flash estimate and economists' forecasts of 46.9, and sharply
down from September's 48.4.
"The bottom line is economic fundamentals in the U.S. are
deteriorating faster than the market can keep up with. And there
is very little an Obama administration can do to shield Asia
from the effects of this downturn," said Kirby Daley, a senior
strategist for Newedge Group in Hong Kong.
The dollar <.DXY> recovered almost one percent against a
basket of major currencies, regaining some of the prior day's
losses when investors searched for higher yielding currencies.
Obama's win "is arguably likely to prove more positive for
foreign markets given the perception that he will be stronger in
terms of dealing with U.S. economic problems, is seen more
favourably by foreigners generally, and is less likely to follow
the policies of President Bush," Calyon said in a report.
But in a reminder of the huge government bill the new U.S.
administration will face after repeated financial and economic
rescues of recent months, U.S. Treasury prices fell after
Obama's win <US2YT=RR> <US10YT=RR>.
Strategists said investors were looking to the U.S.
Treasury's announcement later today of details of the
government's quarterly refunding.
"The market is bracing itself for a big refunding next week.
The Treasury has got a lot to do," said Padhraic
Garvey, rate strategist at ING in Amsterdam.
Gold <XAU=> was trading at $753.65 an ounce, down almost
$10 from its notional New York close on Tuesday.
(Additional reporting by Harpreet Bhal, Brian Gorman, Rebekah
Curtis, Rafael Nam, Ian Chua, editing by Swaha Pattanaik)
