* Democrats extend control of Congress
* Dollar rises, market reaction muted
* World reaction mostly positive
By John Whitesides, Political Correspondent
WASHINGTON (Reuters) - Barack Obama pivoted on Wednesday from the glow of a historic White House victory to the daunting challenge of leading a country mired in a deep economic crisis and two lingering wars.
The day after a sweeping election triumph that will make him the first black president in U.S. history, Obama faced the task of quickly building a new administration and defining his priorities for the formal takeover on Jan. 20.
“The road ahead will be long. Our climb will be steep. We may not get there in one year or even one term, but America — I have never been more hopeful than I am tonight that we will get there,” Obama told more than 200,000 jubilant supporters in Chicago’s Grant Park late on Tuesday.
Obama led Democrats to a decisive victory that expanded their majorities in both houses of Congress, as Americans emphatically rejected Republican President George W. Bush’s eight years of leadership.
Raucous street celebrations erupted across the country, but Obama has little time to enjoy the triumph. Once in office, he will face immediate pressure to deliver on his campaign promises and resolve a long list of lingering problems.
Obama has vowed to withdraw U.S. troops from Iraq in the first 16 months of his term and to bolster U.S. troop levels in Afghanistan, but his first task will be tackling the U.S. financial crisis, the worst since the Great Depression.
World leaders will gather in Washington on Nov. 15 for a summit on the global financial meltdown. The White House has said it does not expect the president-elect to attend, but Obama has not yet stated his plans.
Reports released on Wednesday showed the U.S. private sector jobs market deteriorated rapidly in October and the service sector contracted sharply, highlighting the economic challenges for Obama.
Appearing in the White House Rose Garden, Bush said he had spoken with Obama and congratulated him on an “impressive victory” that represented a “dream fulfilled” for civil rights. He pledged his cooperation in the transition.
“During this time of transition, I will keep the president-elect fully informed on important decisions,” Bush said.
Obama’s planning for the takeover has been under way for weeks and he is expected to move quickly to fill positions such as Treasury Secretary and Secretary of State.
Obama has reportedly asked Rahm Emanuel, a Democratic congressman from Illinois who served in former President Bill Clinton’s administration, to lead his White House as chief of staff.
Obama’s first morning as president-elect was spent in more prosaic duties. He had breakfast at home in Chicago with his two daughters, then headed to the gym for a workout. He planned a stop at campaign headquarters later to thank his staff.
The son of a black father from Kenya and white mother from Kansas, Obama’s triumph over Republican rival John McCain on Tuesday was a milestone that could help the United States move beyond its long struggle with racism.
Many world leaders welcomed his victory. Some hailed it as an opportunity to restore a tarnished U.S. image; others urged him to help forge a new economic order. “Your election has raised enormous hope in France, in Europe and beyond,” French President Nicolas Sarkozy said.
Initial market reaction was muted. Analysts said Obama’s victory had been largely priced in and concerns about the global economy were paramount. The dollar moved higher, recovering some of the previous session’s heavy losses.
Obama won at least 349 Electoral College votes, based on state voting, far more than the 270 he needed. With 96 percent of the popular vote counted, he led McCain by 52 percent to 46 percent.
Democrats gained at least five Senate seats and about 20 in the House of Representatives, giving them a commanding majority in Congress and strengthening Obama’s hand. Four Senate seats remained undecided.
Americans celebrated in front of the White House to mark Obama’s win and Bush’s imminent departure. Cars jammed downtown Washington streets, with drivers honking their horns and leaning out their windows to cheer.
Thousands more joined street celebrations in New York’s Times Square and in cities and towns across the country.
“This is a great night. This is an unbelievable night,” U.S. Rep. John Lewis of Georgia, who was brutally beaten by police in Alabama during a civil rights march in the 1960s, said at an Atlanta celebration.
Allied governments said they hoped for closer cooperation with Washington, while critics of the United States called for changes.
Russian President Dmitry Medvedev spoke of hopes for stronger U.S.-Russian relations, but at the same time vowed retaliation for a U.S missile-defense plan.
(Additional reporting by Randall Mikkelsen and Ross Colvin)
Editing by Kristin Roberts and Alan Elsner