UPDATE 1-Argentina markets jump as investors bet vote result will boost reform agenda

reform agenda@ (Adds country risk measurement, background on election results, analyst comments, factbox link)

BUENOS AIRES, Oct 23 (Reuters) - Argentina's currency and bonds rose on Monday following midterm elections in which President Mauricio Macri's coalition picked up seats in Congress, as investors bet the result would provide a political boost as it tries to pass business-friendly reforms.

While "Let's Change" will remain a minority in the lower house of Congress and the Senate, as expected, its defeat of populist former President Cristina Fernandez in the Senate race in populous Buenos Aires province and strong performance nationwide should help in negotiations with opposition lawmakers, analysts said.

Investors expect that momentum will help it pass its 2018 budget, which aims to cut the fiscal deficit by one percentage point to 3.2 percent of gross domestic product, along with tax, labor and capital markets reforms.

But given Let's Change won a minority of the votes nationwide, the result is unlikely to spur acceleration in the pace of reforms or enable Macri to tackle more ambitious fiscal issues like the pension system, said Edward Glossup, chief Latin America economist at Capital Economics in London

"The fiscal squeeze for next year is probably going to go ahead and get pushed through," Glossup said. "With only 41 percent of the vote, it's still very clear that he's unpopular with large swaths of the electorate."

The peso currency opened up 0.84 percent at 17.295 per dollar, while country risk, a JPMorgan index of Argentine bond yields, fell 15 basis points to 334 points.

Since taking office in December 2015, Macri has implemented a number of reforms to unwind the macroeconomic imbalances he inherited from Fernandez, including letting the peso currency float, cutting export taxes on grains and reducing utility bill subsidies

Many of those measures contributed to inflation and economic contraction last year, prompting Macri to tread lightly in other areas to avoid a political backlash that could have doomed his presidency.

Macri's coalition appeared set to pick up 21 seats in the lower house and 9 in the Senate, reaching one-third in both chambers. That would enable it to block any opposition attempt to override a Macri veto.

"This bodes well for the approval of key reforms during the second half of Macri's term," Goldman Sachs wrote in a note. "However, the administration is likely to continue to favor just a gradual fiscal consolidation path." (Reporting by Jorge Otaola, Walter Bianchi and Luc Cohen; Editing by Chizu Nomiyama and Meredith Mazzilli)