At stake is nothing less than the leadership of the world's largest economy. Yet Wall Street is riding out the political drama with relative calm.

As the US enters its third day of stalemate over who it has elected as its next president, leaving traders worldwide glued to TV screens awaiting answers from an ever-lengthening vote recount in Florida, investors are learning to live with the uncertainty.

"Its a muddle, and its going to be a muddle for sometime. Most people understand that and can manage that," said Banc One Capital Markets chief economist Dana Johnson.

Wall Street analysts said a range of stabilising factors are at play, making the risks that a protracted battle between Republican George W Bush and Democrat Al Gore over who wins the White House will lead to a rout in markets quite small.

The US economic juggernaut remains unchallenged as the most robust in the world, and thus keeps on attracting capital into its markets.

Federal Reserve chairman Alan Greenspan will remain at the helm no matter the outcome. And US treasury secretary Larry Summers, respected by markets for his dogged dollar policy, is going nowhere yet.

"These are some steady hands to have around, and there are no pressing issues in the US economic venue to worry about right now," said Ms Johnson.

These reassuring factors, combined with growing international awareness that the high-stakes battle for the White House can be resolved through the US legal system, prevent the election showdown from turning into a crisis, Wall Street experts said. "I am advising my clients to watch the election drama, be entertained by it, but not to change their investment strategies because of it," said Merrill Lynch chief US fixed income strategist Ken Hackel.

Indeed, the major US asset markets have remained firmly within recent trading ranges since November 7, despite the increasingly acrimonious battle over who won the election.

Stocks did take a dive on Thursday when Gore's campaigns aid it would contest the election results to the bitter end. The Nasdaq composite index fell 4 per cent, sending investors scurrying to the safety of government bonds.

But the scare was temporary. "People were sitting on the sideline waiting for this and then they were picking their spots and buying," said Dreyfus Corp head trader Larry Lawler. The Nasdaq climbed back to end the day off a scant 31.35 at 3,200.35. News that the final tally in the Florida vote recount would be delayed until November 14 and possibly longer had little impact. Analysts said this shows the resilience of financial markets.

"The smart money is studying this thing and realising that we do indeed have a legal process to handle the political issues," said High Frequency Economics' chief economist Carl Weinberg.

Underpinning the calm is relief that the electoral stalemate will only end in political stalemate - regardless of whether it is Mr Bush or Mr Gore who is elected as the next United States President. So no dramatic change in fiscal policy is in the offing, analysts said.

When the new President takes office next year, he will face a fractious US Congress, the most narrowly split between Republicans and Democrats in more than four decades.

Republicans might hold a narrow edge, but with the slimmest of margins so that even Mr Bush would have to compromise.

That means Mr Bush's promises for a $1.3 trillion tax cut - which Wall Street fears would overly stimulate the economy, sparking inflation - and Mr Gore's multi-billion-dollar spending programs - which could threaten the surplus and debt buydown - will be watered down considerably.

"Let's face it, neither one of these guys' policies are going to be so radical that they would spell a change of course for the economy," said Mellon Bank chief strategist Marc Chandler.

Moreover, the lineup of possible economic appointments is sending no shivers through Wall Street. Under Mr Gore, the current team at treasury may stay in place. Under Mr Bush, all the names that have been circulating - former Federal Reserve governor Lawrence Lindsey, PaineWebber Group Inc chief executive Donald Marron, chairman of Credit Suisse First Boston's private equity division John Hennessy - are known quantities to Wall Street."There are no wild cards. They are people who the business community knows and markets are not too scared by what comes out of the box here," said Mr Weinberg.

(Reuters)