U.S. Republicans win House and gain in Senate

WASHINGTON (Reuters) - Disenchanted U.S. voters swept Democrats from power in the House of Representatives and strengthened the ranks of Senate Republicans on Tuesday in an election rout that dealt a sharp rebuke to President Barack Obama.

Two years after Obama won the White House, voter anxiety about the struggling economy and discontent with his leadership fuelled big Republican gains that toppled Democratic House Speaker Nancy Pelosi from power and ushered in a new era of divided government.

House Minority Leader John Boehner (R-OH), who broke down in tears during his speech, gives a thumbs-up at the end of his address to a Republican election night results watch rally in Washington, November 2, 2010. REUTERS/Jim Young

Television networks projected Republicans would pick up at least 50 House seats, more than the 39 they need for a majority that would elevate conservative John Boehner to House speaker, place Republicans in charge of House committees and slam the brakes on Obama's agenda.

It was the biggest shift in power at least since Republicans gained 54 House seats in 1994 when Democrat Bill Clinton was in the White House.

"Our new majority will be prepared to do things differently," Boehner told supporters at a Washington hotel. "It starts with cutting spending instead of increasing it, reducing the size of government instead of increasing it, and reforming the way Congress works."

Obama made a late-night call to Boehner to offer congratulations and discuss working together to create jobs and improve the economy, a Boehner aide said.

Senate Democratic leader Harry Reid pulled out a win in the country's most high-profile Senate race after a brutal battle with Tea Party favourite Sharron Angle in Nevada.

Democrats also won key Senate races in West Virginia and California, where Senator Barbara Boxer won re-election, ensuring Democrats would retain at least a slender Senate majority.

Republican control of the House will likely spark legislative gridlock, weakening Obama's hand in fights over the extension of soon-to-expire income-tax cuts and the passage of comprehensive energy or immigration bills.

"The ability of this administration to get major new programs done was already limited. This just seals the deal," said Jaret Seiberg, policy analyst with the investment advisory firm, Washington Research Group.

U.S. stock futures pulled back from earlier gains as Republican chances of a Senate takeover waned. With opinion polls favouring Republicans, markets had factored in Republicans winning the House and Democrats holding the Senate.

Investors said the outcome of Wednesday's U.S. Federal Reserve meeting was of greater market importance. The Fed is expected to announce it will pump billions into the economy to speed the recovery.

All 435 House seats, 37 of the 100 Senate seats, and 37 of the 50 state governorships were at stake in Tuesday's voting.

Democrats had battled a difficult political climate all year, with stubbornly high unemployment and a growing budget deficit fuelling voter anger at government in Washington. They were also fighting history -- the party that holds the White House traditionally loses seats in a midterm election.

Exit polls found voters were deeply worried about the economy, with eight in every 10 voters saying it was a chief concern. Four of every 10 voters said they supported the Tea Party, and nearly three-quarters believed government did not function properly.

The Republican rout extended from coast-to-coast and knocked at least 30 Democratic incumbents out of the House, including veterans Ike Skelton, chairman of the Armed Services Committee, and John Spratt, chairman of the Budget Committee.

In the Senate, Republicans picked up Democratic seats in Indiana, Wisconsin, North Dakota, Pennsylvania and Arkansas as well as Obama's former seat in Illinois. Democrats held the late Robert Byrd's seat in West Virginia, Boxer won in California and Reid won in Nevada.

TEA PARTY RISES

Florida Republican Marco Rubio and Kentucky Republican Rand Paul became the first Tea Party-backed candidates to win Senate seats, ensuring an influx of conservative views in the staid chamber. Another Tea Party favourite, Republican Christine O'Donnell in Delaware, lost her race.

Grass-roots anger over government spending and economic weakness gave rise to the Tea Party, a loosely organized conservative movement that backed a message of smaller government and lower taxes.

"It's a message that I will carry with me on day one. It's a message of fiscal sanity. It's a message of limited constitutional government and balanced budgets," Paul told supporters in Kentucky.

Republicans picked up at least 10 governorships from Democrats, including the battleground state of Ohio, and held the office in Texas in a race with vital implications for the once-a-decade redrawing of congressional districts that begins next year.

Democrat Jerry Brown won in California in the race to succeed Republican Arnold Schwarzenegger.

Obama will hold a news conference at 1 p.m. EDT (5 p.m. British time) on Wednesday to talk about the post-election landscape.

Dick Durbin, the No. 2 Senate Democrat, said no significant legislation would pass without input from Republicans. "We need to move beyond filibusters and enter a real conversation about passing legislation that this country needs," he told Reuters.

Republican candidates had pushed an agenda of spending cuts and at least a partial repeal of Obama's healthcare and Wall Street reforms, but Obama could veto their efforts.

Stocks in health insurers like UnitedHealth Group Inc, WellPoint Inc and Aetna Inc are likely to rise on Republican gains, analysts said, even if a full repeal of healthcare reform is unlikely.

Voters on Tuesday also weighed in on a variety of topics: in California, for example, CNN projected they rejected a measure that would legalize possession of marijuana.