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That said, extending tax cuts and lifting growth should be the top priorities of the new Congress, according to a Reuters poll of 53 financial analysts, money managers and trading firms.

Repealing the recently-passed financial regulation law was less of a priority for Wall Street. Just three of 53 respondents said scrapping the bill should be one of two top priorities, despite months of vocal opposition.

The poll shows Wall Street has lower unemployment as by far the most important factor in improving the business climate, followed by increased consumer confidence. Those two factors trounce more Fed action and even a stock market rally.

The U.S. economy endured an 18-month recession ending in June 2009, the longest since the Great Depression, but growth since then has been anemic despite attempts by the Obama administration to stimulate the economy through a combination of spending and tax breaks.

The latest Reuters poll of economists shows expectations for a meager 1.8 growth rate for gross domestic product in the third quarter and 2.1 percent in the fourth quarter.

"If the bills and the policies which had been promulgated by the Obama administration had produced extraordinary growth in our economy, I don't think we'd be having these conversations about the mid-term elections ... that is the overriding theme," said Dan Ripp, analyst at Bradley Woods & Co in New York.

All seats in the U.S. House of Representatives and 37 seats in the Senate are up for grabs in the midterm elections. Both houses are currently held by Democrats.

Expectations are for the Republicans to win at least the House. Some say the market has built in such expectations in its recent September rally, and two-thirds of respondents say the market will rally at least modestly if Republicans win one House.

A mid-September Reuters/Ipsos poll showed Republican voters are more enthusiastic about the coming election.

Such an outcome would give Republicans more power and make it harder for Democrats to push their agenda.

TAX BREAKS WANTED

In a question about which two issues the Republicans should focus on after the elections, nearly two-thirds of respondents said extending President George W. Bush-era tax cuts should be a priority, while more than half said boosting economic growth should take top priority.

Democrats have said they want to extend tax cuts for the middle class but let tax rates revert to higher levels for those making at least $250,000 a year. Republicans want tax breaks extended across the board. All the tax breaks will expire at the end of the year without action from Congress.

Just over a third of respondents pointed to reducing the budget deficit as a key factor, while more than a quarter wanted Obama's signature healthcare overhaul repealed.

Six banks had been hit with a 50 basis point increase in reserve requirements, the fourth hike this year, due to excessive lending, the China Securities Journal reported, confirming a Reuters story on Monday.

The dollar rose against the euro and a basket of currencies on a short-covering bounce ahead of the release of minutes from the U.S. Federal Reserve's Open Market Committee meeting from September 21. The dollar index .DXY rose 0.3 percent.

"The dollar has really been the key driver in just about all asset classes, including the market. It's all a function of what our expectations are for quantitative easing come November," said Arthur chief market analyst at Jefferies & Co in Boston.

The prospect of quantitative easing has created an inverse correlation between the dollar and equities as investors use the greenback as a trigger point to move into or out of stocks.

"The biggest driver for the market today before we get the Fed minutes and get into the meat of the earnings season is the pace of the dollar, and that firming up has got us a bit of a selloff," Hogan added.

S&P 500 futures lost 4.9 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures fell 36 points, and Nasdaq 100 futures shed 5.75 points.

The Fed, which will release the minutes at 2 p.m. EDT, said after its September 21 meeting it stood prepared to provide more support for the economy but expressed concern about low inflation.

"At this particular reading of the last minutes meeting, we've had almost every Fed president speak since then. We pretty much know what is on their minds," said Hogan.

As the earnings season picks up steam, results are expected from Intel Corp (INTC.O), railroad operator CSX Corp (CSX.N) and industrial distributor Fastenal Co (FAST.O).

European shares .FTEU3 fell 0.3 percent in early trading, tracking a decline in Tokyo and depressed by a drop in mining stocks on the back of a retreat in the price of copper and other metals.

Asian shares traded lower as indexes consolidated after recent gains amid caution ahead of the corporate earnings season.

U.S. stocks drifted in the lightest trading volume of the year on Monday as few dared to place bets ahead of key company results later this week.

(Editing by Jeffrey Benkoe)

Thailand's cabinet agreed to impose a 15 percent withholding tax on capital gains and interest income from foreign investment in government debt in a bid to brake the baht, which has climbed to its highest level since the 1997 Asian financial crisis.

Japan said it would wade into the foreign exchange market anew if need be to weaken the yen, despite widespread disapproval by its rich-country peers of a rare bout of dollar buying last month.

And Beijing once again talked down the prospects of a faster rise in the yuan, even as it acknowledged that more money would pour into China over the rest of the year in anticipation that the currency would strengthen.

China's insistence that the yuan's rise must be gradual is a huge obstacle to the appreciation in Asian exchange rates that policymakers say are needed to help reduce global economic imbalances. Countries that compete with China fear losing business if they unilaterally let their currencies rise.

The announcement by Thailand, which had been widely trailed, came a week after Brazil doubled a tax on foreign portfolio inflows into bonds and some other financial instruments to 4 percent to reduce upward pressure on the real, its currency.

"It won't change its direction because the strong baht is in line with other currencies worldwide," said Thiti Tantikulanan, head of capital markets at Kasikornbank Pcl in Bangkok.

The baht has risen 11 percent this year, the second-strongest currency in Asia after the yen, pushed up in part by foreign inflows into Thai assets.

With interest rates in the developed world at record lows, emerging market governments are scrambling to respond to a surge of demand by global investors seeking higher returns.

The tide of money is rising as markets anticipate that the Federal Reserve will crank up the money printing presses again next month to try to galvanize the stuttering U.S. economy.

A second round of quantitative easing by the U.S. central would aim primarily to lower long-term U.S. interest rates, but it would also pile more pressure on dollar, which is already languishing near a 15-year low against the yen.

DECISIVE STEPS

Japanese Finance Minister Yoshihiko Noda said he had explained to a weekend meeting of the Group of Seven industrial countries in Washington that Tokyo had intervened on September 15 to prevent destabilizing lurches in exchange rates.

"The G7 reaffirmed that excessive currency moves would hurt stability in the economy and in the financial system ... From this standpoint we will take decisive steps, including intervention, when needed, while watching currency market moves with great interest," Noda told a news conference.

With governments digging in their heels against currency appreciation, fears are mounting of a "race to the bottom" that may trigger protectionist trade tariffs that would hobble global growth.