(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. 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 (NYSE:STT) 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. 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.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ 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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