European stock markets slid and the euro dropped against the dollar on Wednesday in the wake of US President Barack Obama's convincing re-election win that came ahead of a key vote on Greek austerity.
After rising initially as traders cheered an end to US political uncertainty, equities and the European single currency headed south as investors' attention switched to the challenging US economic outlook and poor European data.
In early afternoon deals, London's FTSE 100 index of top companies was down 0.21 percent at 5,872.28 points, Frankfurt's DAX 30 retreated 0.26 percent to 7,358.78 points and in Paris the CAC 40 shed 0.37 percent to 3,465.62.
"European financial markets were earlier cheering Obama's re-election as US president for another four years, but it wasn't long before worries about pressing financial issues in the months ahead for the US and downbeat rumblings out of Europe knocked the market off its highs," said Ishaq Siddiqi, an analyst at ETX Capital trading group.
Democrat Obama swept to victory over Republican challenger Mitt Romney on Tuesday in the United States, despite a dragging economy and the stifling unemployment that haunted his first term.
"The election results have in effect returned the status quo to US politics as was widely expected," said Lee Hardman, currency analyst at The Bank of Tokyo-Mitsubishi UFJ in London.
He added that a knee-jerk dollar sell-off mainly reflected "investor concerns that maintaining the status quo increases the likelihood of the Feds current loose monetary policy stance remaining in place in the years ahead."
Hardman said the market's attention would now turn to negotiations between the Democrats and Republicans on the US fiscal cliff -- a mandated sharp cut in government spending and end to a package of tax breaks expected to suck half a trillion dollars out of the economy next year.
IMF chief Christine Lagarde on Monday urged the United States to "address quickly" the budget mess facing the government, no matter who won the election.
After a brief rise versus the US currency, the euro was down at $1.2758 in London afternoon deals, which compared with $1.2814 late in New York on Tuesday.
The European single currency reversed direction as the European Commission slashed its eurozone economic growth forecast for next year to just 0.1 percent, six months after tipping a much stronger recovery of 1.0 percent.
Official data meanwhile revealed slumps in German and Spanish industrial output during September.
-- Greek austerity vote looms --
"While events in the US are bound to dominate trading today, events in Europe are also likely to be keenly watched with particular attention once again focused on Athens," said Michael Hewson, senior analyst at trading group CMC Markets.
Greek lawmakers were to vote Wednesday on austerity measures needed to unlock international aid and stave off bankruptcy despite strikes and public anger against billions more euros in tax hikes and pension cuts.
Lawmakers were due to wrap up their debate and hold a late-night vote on the package of 18.5 billion euros ($23.6 billion) in new spending cuts and other reforms by 2016.
Implementing the austerity plan is a condition for Greece to receive a 31.5-billion-euro tranche of bailout funds from its troika of international creditors -- the European Union, International Monetary Fund and the European Central Bank.
-- European companies post mixed earnings --
Munich Re shares won 1.96 percent to 130.1 euros in Frankfurt deals after the world's biggest reinsurer said it was raising its full-year profit forecast, despite the expected claims losses from superstorm Sandy that battered the United States last week.
"The result for the first three quarters is more than pleasing. Despite Hurricane Sandy, we are very optimistic of realising a profit in the region of 3.0 billion euros for 2012," said chief financial officer Joerg Schneider.
At the beginning of the year, Munich Re had envisaged a full-year profit of around 2.5 billion euros.
French bank BNP Paribas saw its share price jump 4.06 percent to 40.71 euros after the company more than doubled its net profit in the third quarter.
In London, Burberry shares fell 0.64 percent to 1,244 pence as the British luxury clothing and accessories group said its net profits slumped 27.5 percent in the company's first half to £85 million ($136 million, 106 million euros).
The fashion label was hit by a one-off charge of £73.8 million related to the termination of a fragrance and beauty licence deal. Burberry had meanwhile in September warned that its second-quarter earnings had been impacted amid economic slowdown in key market China.
Pearson climbed 1.45 percent to 1,258 pence, a day after the publisher denied that it was planning to sell the Financial Times newspaper following media speculation.
Elsewhere on Wednesday, shares in ING gained 0.45 percent to 6.91 euros after the Dutch bank said it would cut 2,350 jobs in the coming years as it announced a sharp drop in net profits for the third quarter.
Asian stock markets closed mixed on Wednesday, while on the London Bullion Market, gold prices jumped to $1,726.46 an ounce from $1,691 on Tuesday.