* Dollar hits it lowest level in over two weeks
* S Africa's rand trading at strongest levels since Aug
* China's FX reserves fell to 1.5 year low in Oct.
By Agamoni Ghosh
Nov 7 (Reuters) - Emerging stock and currency markets inched higher on Wednesday as investors took a positive view of U.S. midterm elections that gave Democrats the ability to thwart President Donald Trump but left Republicans firmly in charge of the Senate.
A dip in the dollar due to reduced expectations of more pro-business policy moves by Trump, which might soften the case for further rises in U.S. interest rates in the future, also benefited a number of major emerging currencies.
"There was some fear and risk of a sensational result today, but it has come out as expected. It is a good result for consistency in the market," said Nick Twidale, an analyst with Rakuten Securities in Sydney.
"We'll see a couple of days of risk-on trading on the back of these results. Then we'll go back to closely analysing the U.S.-China situation. The next time Trump speaks on trade, there will be a lot of attention on what he says."
The MSCI's benchmark emerging equity index gained 0.58 percent, with Chinese equities ending lower in choppy trade as an uncertain economic outlook outweighed government pledges of support for wavering markets.
But the yuan, buffeted by concerns over Trump's aggressive trade moves against Beijing this year, recovered almost all of an early loss as the mood among financial investors globally turned more positive.
China's foreign exchange reserves fell to a one-and-a-half year low in October, suggesting authorities may be stepping up intervention amid mounting trade pressure.
Stock markets in emerging economies this year have fallen almost 14 percent, bearing the brunt of higher U.S. rates and worries over global growth and the U.S.-China stand-off on trade.
Hong Kong and Taiwan stocks outperformed their mainland Chinese counterparts, with the Hang Seng closing up 0.10 percent and Taiwan up 0.9 percent, at its highest in a little over two weeks.
The emerging market currency index was up about 0.3 percent, with the dollar continuing to slip as the session wore on.
South Africa's rand firmed more than 1 percent to its strongest levels since August, while the Turkish lira edged back into positive territory and sent the country's dollar bonds to their highest since August.
The Russian rouble was up by 0.3 percent, with data showing inflation accelerated in October. Stocks, however, declined as the market priced in lower oil prices and the prospect of more U.S. sanctions on Moscow.
The Polish zloty gained for the fifth straight session ahead of a central bank decision at which no rate change expected.
For GRAPHIC on emerging market FX performance 2018, see tmsnrt.rs/2egbfVh
For GRAPHIC on MSCI emerging index performance 2018, see tmsnrt.rs/2OusNdX
For TOP NEWS across emerging markets
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see (Reporting by Agamoni Ghosh and Sruthi Shankar in Bengaluru; Additional reporting by Swati Pandey)