Reuters: US Dollar Report: GLOBAL MARKETS-World stocks, gold, fall after Fed minutes

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GLOBAL MARKETS-World stocks, gold, fall after Fed minutes Apr 3rd 2012, 19:45 Tue Apr 3, 2012 3:45pm EDT * Fed minutes weigh on stocks, oil * Dollar gains while bonds ease * Gold drops By Caroline Valetkevitch NEW YORK, April 3 (Reuters) - World stocks fell and gold prices dropped 2 percent o n T uesday as minutes from the latest U.S. central bank meeting showed policymakers may be less keen to launch further economic stimulus. Safe-haven bonds also eased, while the dollar gained. Federal Reserve policymakers, in their March meeting minutes, noted recent signs of slightly stronger growth but remained cautious about a broad pick-up in U.S. economic activity. Still, the minutes suggested the appetite for another dose of stimulus via quantitative easing, so-called QE3, has eased. The MSCI world equity index dropped 0.8 percent and the benchmark U.S. S&P 500 index was down 0.6 percent after falling more than 1 percent shortly after release of the minutes. "I believe there might be no QE3 immediately. They are more on the fence now about keeping rates exceptionally low through at least late 2014. This is not what the market is looking for," said Robbert Van Batenburg, head of global research at Louis Capital Markets in New York. Optimism about possible further stimulus from the Fed has helped fuel recent gains in stocks, which have been on an uptrend in the United States for the past six months. The Dow Jones industrial average was down 97.26 points, or 0.73 percent, at 13,167.23. The Standard & Poor's 500 Index was down 9.08 points, or 0.64 percent, at 1,409.96. The Nasdaq Composite Index was down 17.49 points, or 0.56 percent, at 3,102.21. Spot gold was down 2.1 percent at $1,642.06 an ounce. Gold has now fallen below its levels in late January, when the Fed said it would keep interest rates near zero until at least late 2014 and investors believed more easing was likely. The dollar was up 0.7 percent against a basket of currencies . The currency hit a session high against the yen and euro. Brent and U.S. crude futures fell on the Fed news, with Brent May crude down 57 cents, or 0.45 percent, to settle at $124.86 a barrel. In the U.S. bond market, benchmark 10-year notes were last down a full point in price to yield 2.2952 percent, up from around 2.18 percent before the minutes were released. The FOMC minutes suggested there may be less of a chance the Fed will buy more bonds to hold down long-end rates. This led some traders to get out of earlier bets that the Fed is ready to buy more Treasuries after the $400 billion Operation Twist program is set to end in June. "The (Fed) committee's discussion was in line with my view that the Fed has a fairly high bar for implementing additional easing. That conclusion is what the markets are reacting to with the dollar strengthening, bonds down, stocks down and gold down a bit," said Brian Jacobsen, chief fixed-income strategist for Wells Fargo Advantage Funds in Menomonee Falls, Wisconsin. In European equities, blue chip shares ended lower, paring the previous session's sharp gains, as Spain's economic woes weighed on banks. Spain's IBEX shed 2.7 percent, underperforming the pan-European FTSEurofirst 300 which fell 1.1 percent to 1,072.87. Link this Share this Digg this Email Reprints

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