By Mike Dolan LONDON (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 and worldwide emerging markets clocked up gains of more than one percent to three-week highs. Wall St futures pointed to a lower open after Tuesday's strong gains. The U.S. dollar 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 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 stabilization. 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 11 a.m. EST to announce more 10-year note and 30-year bond offerings to fund a welter of new government rescue programs. 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 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 8 a.m. EST, world stocks defined by the MSCI's global index 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, Royal Dutch Shell, BG Group and Cairn Energy 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 8 a.m. EST. AstraZeneca, GlaxoSmithKline, Novartis and Sanofi-Aventis 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 shed 4.0 percent after saying its third-quarter net profit more than halved due to higher provisions tied to the upheavals. HSBC lost 2.9 percent and BBVA 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. "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 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 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)

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