By Lisa Twaronite
TOKYO (Reuters) - The dollar and U.S. stock futures pushed higher on Wednesday after Republicans scored a sweeping victory in U.S. mid-term elections, while Asian shares wilted and oil prices extended losses after more soft economic data from China.
Financial spreadbetters expected the equities gloom to lift in early European trade, predicting Britain's FTSE 100 and France's CAC 40 would open up as much as 0.7 percent, with Germany's DAX seen up as much as 0.8 percent
"We are calling the major bourses firmer with yesterday's sell-off seemingly overdone," IG market strategist Stan Shamu wrote in a note.
Republicans seized control of the U.S. Senate and also strengthened their grip on the House of Representatives. When the new Congress takes power in January, they will be in charge of both chambers of Congress for the first time since elections in 2006, raising hopes for an end to political gridlock in Washington.
S&P E-mini futures rose 0.4 percent, pointing to a stronger open on Wall Street.
A weaker yen bolstered exporters shares in Japan, helping the Nikkei stock average erase early losses and end up 0.4 percent at its highest closing level since October 2007.
But other Asian stock markets were weighed down by a spate of surveys in recent sessions suggesting that China's economy continued to lose momentum heading into the fourth quarter.
MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.5 percent.
Service sector growth in China weakened in October as new business cooled, a private survey showed on Wednesday, coming just days after other data revealed sluggish factory growth in the world's second-largest economy that could prod Beijing to unveil fresh stimulus measures.
DOLLAR REBOUNDS
The dollar index was up about 0.2 percent on the day at 87.159, edging back toward its four-year high of 87.406 touched on Monday.
The dollar rebounded after an earlier dip as investors locked in profits after this week's rally, while a Reuters report saying central bankers in the euro zone plan to challenge European Central Bank President Mario Draghi's leadership style led to short-covering in the euro earlier.
Some members intend to raise their concerns with Draghi at the governors' traditional informal working dinner on Wednesday before the ECB's formal monthly rate-setting meeting on Thursday, the sources interviewed by Reuters said.
"We do not expect further easing at Thursday's ECB meeting but it may give more insight into its new asset purchase programmes," strategists at Barclays said.
The dollar was buying 114.16 yen, up 0.5 percent after touching a fresh seven-year peak of 114.40 yen.
The euro edged down about 0.1 percent to $1.2537 but remained above a two-year low of $1.2439 set on Monday.
The European Commission on Tuesday downgraded its forecast for euro zone economic growth over the next few years, leading investors to raise bets the ECB might consider more action to stimulate the region's economy.
On Wall Street on Tuesday, the S&P 500 and Nasdaq Composite ended lower after the big drop in oil prices, while the Dow Jones industrial average eked out a small gain, with energy shares under pressure.
U.S. data on Tuesday revealed a surprise widening of the trade deficit last month, which raised speculation that the initially reported 3.5 percent pace of third-quarter U.S. growth could be revised down. That in turn could reduce the likelihood that the U.S. Federal Reserve would hike interest rates in 2015.
The Commerce Department said the trade deficit grew 7.6 percent to $43.03 billion, compared with a forecast of $40.00 billion among analysts polled by Reuters.
The data increased the safe-haven appeal of U.S. Treasury notes, pushing down the benchmark 10-year yield and weighing on the dollar. The yield stood at 2.344 percent in Asia, compared to its U.S. close of 2.342 percent on Tuesday, when it fell as low as 2.303 percent.
Crude prices extended losses after tumbling to multi-year lows on Tuesday on news that top oil exporter Saudi Arabia had cut its U.S. sales prices.
U.S. crude futures edged down about 0.2 percent to $77.01 a barrel in Asia after reaching the lowest intraday price since October 2011 after the Saudi move. Brent fell about 0.5 percent to $82.37.
Spot gold fell about 0.4 percent to $1,163.00 an ounce, down for the fifth session in six to mark fresh four-year lows. Silver tracked gold lower, shedding over 2 percent to $15.58 - its lowest since February 2010.
(Editing by Eric Meijer & Kim Coghill)
