Barack Obama, buoyed by election win, faces new battles

President Barack Obama had little time to savor victory on Wednesday after voters gave him a second term in the White House where he faces urgent economic challenges, a looming fiscal showdown and a still-divided Congress able to block his every move.

Despite a decisive win over Republican Mitt Romney in Tuesday's election, Obama must negotiate with a Republican majority in the House of Representatives to try to overcome the partisan gridlock that gripped Washington for much of his first term.

The Democratic president's most immediate concern is the "fiscal cliff" of scheduled tax increases and spending cuts that could crush the U.S. economic recovery if it kicks in at the start of next year.

The prospect of Obama and Congress struggling to agree on the issue weighed heavily on global financial markets on Wednesday and helped send Wall Street stocks into a post-election swoon.

Obama also faces challenges abroad including the West's nuclear standoff with Iran, the civil war in Syria, the winding down of the war in Afghanistan and dealing with an increasingly assertive China.

At home, Obama's triumph could embolden him in his dealings with the Republicans, who were in disarray after failing to unseat him or reclaim control of the U.S. Senate, an outcome many conservatives had predicted. Their party is now headed for a period of painful soul-searching.

Voters gave Obama a second chance despite stubbornly high unemployment and a weak economic recovery, but they preserved the status quo of divided government in Washington.

Obama's fellow Democrats retained control of the Senate and Republicans kept their majority in the House, giving them power to curb the president's legislative ambitions on everything from taxes to immigration reform.

This is the political reality facing Obama - who won a far narrower victory over Romney than his historic 2008 victory over John McCain when he became the country's first black president.

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