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European stock markets slipped Tuesday on trepidation over US midterm elections seen as a referendum on Donald Trump’s presidency, while US markets rose after a quiet session.
Key European markets were down by as much as one percent at the close, while Wall Street reversed early declines to post solid gains.
The S&P 500 ended up 0.6 percent. But trading volume was light as investors refrained from placing bets ahead of key election returns, which polls indicate are likely to show Democrats taking control of one house of the legislature.
Conventional market wisdom says that equity prices should fall if the Republicans lose both chambers of Congress, and should rise if they retain both, dealers said.
‘It’s not a surprise to see a mixed picture across global equity markets… as investors are very much in a ‘wait-and-see mode’ ahead of today’s US midterm elections,’ noted Oanda analyst Dean Popplewell.
At stake are all 435 seats in the House of Representatives, 35 seats in the 100-member Senate, 36 governor’s posts and seats in state legislatures across the country.
Polls are showing the voting is most likely to yield a Democratic win in the House of Representatives and a Republican victory in the Senate, but the margins are very close in many states.
That outcome is not expected to undo Trump’s tax cuts and efforts to roll back regulations, initiatives investors have praised. Nor would it reverse Trump’s aggressive efforts to remake international trade, a source of unease for investors. 
However, a Democratic victory in either house would likely lead to extensive investigation of Trump’s administration, creating new roadblocks for his agenda.
The vote represents the first major electoral test for Trump since he took the White House two years ago and embarked on an ‘America First’ agenda that has split opinion across the country and globally, marked by aggressive trade confrontations.
A surprise outcome in either direction could lead to major market swings, including in the foreign exchange market. The dollar fell modestly on Tuesday against the euro. 
‘Today’s vote wields the potential to shape the outlook for the president’s growth-positive agenda that in turn has been positive for the greenback,’ said Joe Manimbo, senior market analyst at Western Union Business Solutions.
‘The dollar would be vulnerable to a meaningful retreat from recent 16-month highs if the election outcome poses a threat to the president’s agenda.’
Key figures around 2120 GMT
New York – Dow: UP 0.7 percent at 25,635.01 (close)
New York – S&P 500: UP 0.6 percent at 2,755.45 (close)
New York – Nasdaq: UP 0.6 percent at 7,375.96 (close)
London – FTSE 100: DOWN 0.9 percent at 7,040.68 (close)
Frankfurt – DAX 30: DOWN 0.1 percent at 11,484.34 (close)
Paris – CAC 40: DOWN 0.5 percent at 5,075.19 (close)
EURO STOXX 50: DOWN 0.3 percent at 3,207.42 (close)
Tokyo – Nikkei 225: UP 1.1 percent at 22,147.75 (close)
Hong Kong – Hang Seng: UP 0.7 percent at 26,120.96 (close)
Shanghai – Composite: DOWN 0.2 percent at 2,659.36 (close)
Euro/dollar: UP at $1.1416 from $1.1407 at 2100 GMT on Monday
Pound/dollar: UP at $1.3097 from $1.3041
Dollar/yen: UP at 113.46 yen from 113.19 yen
Oil – Brent Crude: DOWN $1.04 at $72.13 per barrel
Oil – West Texas Intermediate: DOWN 89 cents at $62.21 per barrel