Gains for Joe Biden that left the US presidential election too close to call drove a recovery in Mexico's peso on Wednesday, after emerging markets earlier lost ground on signs that Donald Trump was headed for victory.

The peso and South Africa's rand both recovered ground after losses overnight, when the Mexican currency fell up to 4%, as prospects of swing states going the way of the Democratic candidate increased.

But with the vote hanging in the balance and the previous bullish scenario of a Democrat sweep priced in by some investors no longer in play, appetite for risk in the countries targeted by Trump on trade and other issues over the past four years remained subdued.

All eyes were on the vote counts in Wisconsin, Michigan and a handful of other states likely to decide whether Trump stays or Biden replaces him.

The peso was flat, while the yuan recovered from early losses after President Xi Jinping flagged strong local consumption trends and said China was moving faster to open up its financial markets.

"Markets appear to have leapt too quickly to assume another Trump upset, but it is still too early to call," said Barclays strategist Marvin Barth.

"This leaves us in election limbo awaiting the result and the longer it drags on the more likely we are to go towards a contested election. Riskier currencies are underperforming and the USD and US Treasuries have rallied and we think there is more of that ahead."

Emerging market hard-currency bonds issued by higher-rated developing economies from Mexico to Colombia rallied, with analysts saying the fall in longer-dated US Treasury yields spurred a fresh hunt for yield. .

After hours of wild price swings, several stock markets had gained ground, with Turkish and South African shares both up around 1% and MSCI's main emerging index up 0.5%.

Both presidential candidates claimed overnight they were on course for victory after results for a majority of states were called. Trump went further, claiming falsely that the election was being "stolen" from him with millions of votes still uncounted.

With the dollar up 1%, the Russian rouble, which has drawn strength from Trump's commitment to oil and close ties with President Vladimir Putin, stayed relatively resilient, edging down 0.2%.

For the rand, the dollar move overshadowed data showing South Africa's factory activity expanded for the first time in 18 months in October.

Emerging market currencies had risen in the run-up to the presidential vote, as bets of a clear Biden victory pressured the dollar and supported expectations of more fiscal spending to stoke growth in the world's biggest economy.