LONDON (AFP) - - Wall Street and European stocks fell back Wednesday as investors buckled down for an expected gloomy economic ride after the euphoria of Democrat Barack Obama's US presidential election victory.

Dealers said gains made Tuesday on hopes for fresh efforts to tackle the global financial crisis were surrendered quickly on Wall Street and in Europe although Asia did better despite signs of gathering economic problems.

They said the markets realise that little can happen immediately, with Obama due to be sworn in only in late January, and the global economy faces serious headwinds regardless of the political leadership involved.

"Given the much bigger economic picture there is little chance of a post-election rally," Slaney said.

"There is an element of 'buy the rumour, sell the news' that is driving some profit-taking to kick in," he added.

On Wall Street, the Dow Jones Industrial Average was down 2.39 percent at around 1700 GMT.

In Europe, London's FTSE 100 index of leading shares shed 2.34 percent at 4,530.73 points. In Paris, the CAC 40 index fell 1.98 percent to 3,618.11 points and in Frankfurt, the DAX lost 2.11 percent to 5,166.87 points.

In Asian trade earlier, however, Tokyo ended with a gain of 4.46 percent, Hong Kong jumped 3.2 percent and Sydney rose 2.9 percent.

US stocks staged a powerful rally on Tuesday, with the DJIA up 3.28 percent which gave the Asian markets a good start but this was not carried over into Europe.

Obama, an African-American Illinois senator campaigning for change after eight years under the Republican administration of President George W. Bush, defeated Republican John McCain to become the 44th US president.

Obama faces a global financial crisis and a host of domestic problems in the economy, including rising unemployment, falling home values and slowing exports when he takes office on January 20.

World leaders hailed Obama's historic triumph but there were also calls for the global superpower to change the way it does business.

European Commission president Jose Manuel Barroso called for the election to usher in a "new deal" between the United States and the rest of the world to tackle the global financial crisis and other troubles.

"Back to the realities of financial world and it seems that the euphoria didn't last that long with stock markets around the globe peering into what they increasingly believe will be a long and protracted period of global recession," said Howard Wheeldon, senior strategist at BGC Partners.

Up to Obama's inauguration in January, "there is unlikely to be much if any positive economic news ... despite (government efforts) ... there is unlikely to be much good news around to provide cheer for quite a while," Wheeldon said.

After the strong technical bounce of the past few days, "we now move into a period when markets are likely to do little more than move sideways with the odd upward and downward blip," he said.

Dealers noted that investors across Europe were anticipating further cuts to interest rates on Thursday by both the Bank of England and the European Central Bank to give the economy another boost.

Some economists are forecasting the BoE to follow up last month's emergency half-point reduction to 4.50 percent with a cut of one percent this time around given the deterioration in the economic outlook.

Economists expect a cut of half a percentage point to 3.25 percent by the ECB. Late last month, the US Federal Reserve slashed its key lending rate by a half point to match a historic low of 1.0 percent.

In other European markets, Madrid edged up 0.18 percent, Milan fell 1.44 percent, Brussels lost 1.53 percent and Switzerland was down 3.48 percent.

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