By Sruthi Shankar
(Reuters) - European stocks closed with strong gains on Wednesday as investors unwound bets of a Democratic sweep in the U.S. presidential election as the race proved far closer than polls had predicted.
The healthcare sector <.SXDP>, typically considered more stable during times of economic uncertainty, rallied 4.9%, while technology stocks <.SX8P> that have powered a rebound in global equities since the pandemic lows, surged 3.0%.
Global markets were whipsawed earlier as U.S. Republican President Donald Trump took the lead over Democratic rival Joe Biden in a number of vital swing states, while opinion polls had given Biden a strong lead nationwide for months.
Adding to concerns, Trump falsely claimed he had won the election with millions of votes still uncounted, and said he would go the U.S. Supreme Court to fight for the win if needed.
After falling as much as 1.3% at one point, the pan-European STOXX 600 index <.STOXX> swung 2.1% higher, while the German DAX <.GDAXI> gained 2% and UK's FTSE <.FTSE> rose 1.7%.
European markets gained earlier this week on anticipation a Biden win would bring better trade ties with Washington and a bigger fiscal package for the coronavirus-hit U.S. economy.
Economically sensitive banking <.SX7P>, oil & gas <.SXEP> and mining <.SXPP> stocks fell into the red after leading a surge this week on hopes of more stimulus.
Wind turbine makers Vestas <VWS.CO> and Siemens Gamesa <SGREN.MC>, which were expected to benefit from Biden's clean energy plan, fell 3.5% and 1.6% respectively.
"Markets are to some extent reversing the pricing in of the 'blue wave'. We have better support for likes of healthcare and technology," said Jonathan Stubbs, equity strategist at Berenberg.
On Wall Street, the technology-heavy Nasdaq <.IXIC> index surged 4.1% as investors said chances faded for Democrats to score a big win in the U.S. Senate, lowering bets of higher antitrust scrutiny and capital gains taxes.
"We would interpret the outperformance of the Nasdaq as possibly a divided government, less fiscal stimulus, and more stay-at-home environment as COVID-19 cases rise," said Matthias Scheiber, global head of multi asset portfolio management at Wells Fargo Asset Management.
European equities, which lean on "value" sectors such as banks and energy, trade at a record low relative to U.S. stocks which count big on "growth" sectors like technology.
(GRAPHIC: MSCI Europe at all-time lows relative to MSCI USA - https://fingfx.thomsonreuters.com/gfx/mkt/oakpenkeqvr/Pasted%20image%201604473839462.png)
Among individual movers, German online fashion retailer Zalando <ZALG.DE> jumped 4% after it confirmed the increased guidance it gave last month.
Britain's Marks & Spencer <MKS.L> surged almost 5% after encouraging performance in its food business but reported the first loss in its 94 years as a publicly listed company.
(Reporting by Sruthi Shankar in Bengaluru; Graphic by Danilo Masoni in Milan; editing by Saumyadeb Chakrabarty and Bernadette Baum)