* Global equities up 0.1 pct as Obama wins U.S. election
* Asia stocks set 3-week high, but European bourses retreat
* Wall St points to lower open, Dollar loses early bid
* German fiscal stimulus, US quarterly refunding hit bonds
(Updates with European markets, latest prices)
By Mike Dolan
LONDON, Nov 5 (Reuters) - Global stock markets, which have
surged more than 20 percent in just over a week, clung to those
gains on Wednesday as investors assessed the economic problems
facing U.S. president-elect Barack Obama and the international
fallout of a new administration.
The regional split was stark, however. European stocks
<> fell for the first time in seven days while Asia's
bourses <.MIAPJ0000PUS> and worldwide emerging markets <.MSCIEF>
clocked up gains of more than one percent to three-week highs.
Wall St <SPZ8> futures pointed to a lower open after
Tuesday's strong gains. The U.S. dollar <.DXY> did the reverse,
recovering some of the previous session's heavy losses.
The widely-expected victory for Democrat Obama was confirmed
by early results from Tuesday's U.S. presidential elections.
Democrats increased majorities in both houses of Congress,
but appeared to fall short of the nine extra Senate seats needed
to reach a so-called "super majority" of 60 seats that would
give them the muscle to defeat Republican procedural hurdles.
The results saw investors take stock of the new political
and economic landscape after a week in which global markets have
recovered sharply from credit-related shocks of October as money
market strains [] and extreme volatility <.VIX> eased.
"We've had a long up move but we're not out of the woods and
the economic environment continues to deteriorate," said Jeremy
Batstone-Carr, private client research head at Charles Stanley.
The overall tone of global markets remained one of
stabilisation. But with the U.S. election results now largely
known, analysts said several influences were back in play.
These included gloomy economic data such as Friday's
upcoming U.S. employment report, the prospect of deep interest
rate cuts in the euro zone and Britain on Thursday, Germany's
plans for a 50 billion euro economic stimulus and heavy U.S.
borrowing plans on Wednesday, and ongoing easing of interbank
lending rates.
"Obama's honeymoon period will be short-lived faced with the
worst economic crisis for several decades and with the fiscal
situation having already deteriorated sharply," Calyon analysts
said in a note to clients, warning that the size of any new U.S.
fiscal stimulus and its ease of passage was now a focus.
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. ADP
Employer Services said on Wednesday private-sector employers
alone cut a bigger-than-expected 157,000 jobs during the month.
Many investors, meantime, are looking for the Treasury at
1600 GMT to announce more 10-year note and 30-year bond
offerings to fund a welter of new government rescue programmes.
The Treasury said on Monday it would need to borrow a record
$550 billion in the October-December quarter, including a likely
$300 billion in financing for the Federal Reserve's operations.
Crude oil prices <CLc1> fell more than 3 percent on
Wednesday and the dollar recovered some of Tuesday's biggest
one-day loss against the euro since the latter's launch in 1999.
The dollar has tended to benefit from extreme global market
stress of late due to flows related to the deleveraging of
global finance, fund redemptions, some repatriation of U.S.
money overseas and safe-haven demand for U.S. Treasury bonds.
By 1300 GMT, world stocks defined by the MSCI's global index
<.MIWD00000PUS> were down 0.1 percent.
The gloomy economic data stream was 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. It was below the flash
estimate and forecasts and down from September's 48.4.
SECTOR SPECIFIC
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.
Pharmaceuticals were the biggest losers on the FTSEurofirst
index of leading European stocks, which was down 1.8 percent at
1300 GMT. AstraZeneca <AZN.L>, GlaxoSmithKline <GSK.L>, Novartis
<NOVN.VX> and Sanofi-Aventis <SASY.PA> down 3.8-4.5 percent.
Ever since former president Bill Clinton's key policy was to
reduce the cost of drugs to the consumer, the market has said a
Democratic victory is not good for the sector. said Jim
Wood-Smith at William de Broe.
Simon Mather, an analyst at WestLB, said: "The victory of
Barack Obama opens the door for accelerating pricing pressure"
in the pharma sector.
The financial crisis continued to loom large in Europe and
battered banks were the heaviest weight. BNP Paribas <BNPP.PA>
shed 4.0 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.
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>.
"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.
European government bond prices <EU10YT=RR> also fell
sharply on the German economic stimulus plans and further
declines in the London interbank offered rate (Libor) fixings
for money market lending rates.
The European Central Bank and Bank of England are expected to
to announce deep interest rate cuts on Thursday.
(Additional reporting by Simon Falush, Harpreet Bhal, Brian
Gorman, Rebekah Curtis, Rafael Nam, Ian Chua, editing by Swaha
Pattanaik and Victoria Main)
