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 The stronger dollar helped push U.S. oil prices to six-year lows and
weighed on the price of gold.
Greece, where a radical leftist prime minister took over on Monday,
also kept investors nervous, although Greek shares regained some
ground after falling 9.2 percent on Wednesday.
The Fed, after a two-day policy meeting, also said it would be
"patient" and would take international developments into account in
deciding when to raise borrowing costs -- a reference some in the
markets saw as meaning any hike could be delayed.
German government bond yields fell, following similar declines in
U.S. Treasuries, on this dovish view. U.S. 30-year bond yields
<US30YT=RR> hit a record low on Wednesday.
Concerns over Greece, whose new government opposes the conditions
attached to the country's international bailout, also boosted demand
for low-risk debt, though Greek yields soared.
European shares, driven lower on Tuesday and Wednesday, after the
left-wing party Syriza won Sunday's election in Greece, fell again.
The pan-European FTSEurofirst 300 index <.FTEU3> was last down 0.7
percent at 1,464 points.
"The bullish tone by the Fed on the economy caught investors
off-guard," said John Plassard, senior equity sales trader at
Mirabaud Securities in Geneva.
"Meanwhile, investors are fretting about Greece again, and it could
go on for a while. What happened yesterday with Athens's bourse
losing 9 percent is spooking investors. That said, it's too early to
draw conclusions about the new government."
The main Athens stock index <.ATG> was up 0.5 percent, with bank
shares, hammered this week, bouncing off record lows. Greek 10-year
bond yields hit 1 1/2-year highs above 11 percent, up more than 30
basis points on the day.
Shares were weak in Asia. Japan's Nikkei fell 1.1 percent in its
biggest one-day drop in two weeks. MSCI's main measure of
Asia-Pacific shares, excluding Japan, fell 1.2 percent.
Wall Street fell on Wednesday, with the S&P 500 index losing 1.4
percent following the Fed statement and as lower oil prices
pressured energy stocks.
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The Fed's monetary policy stance contrasts with those of other major
central banks. The European Central Bank last week unveiled a
bond-buying program to stimulate the economy.
The dollar index , which measures the greenback against a basket of
currencies, was up 0.2 percent. The U.S. currency was up 0.3 percent
at 117.87 yen. The euro was marginally lower at $1.1304.
"By underlining 'international developments', the Fed is
highlighting that process and the attraction of the U.S. as an
investment destination. That all plays in to dollar strength," said
Ian Stannard, head of European FX strategy with Morgan Stanley in
London.
The New Zealand dollar hit its lowest since March 2011 after the
central bank opened the door to a possible interest rate cut
Brent crude oil rose 0.25 percent to $48.60 a barrel. U.S. oil
futures were down 0.1 percent at $44.40, having hit a near six-year
low of $44.08 after data showed U.S. stockpiles rose by almost 9
million barrels last week.
Gold retreated after the Fed outlook lifted the dollar and was last
at $1,279.80 an ounce.
(Additonal reporting Blaise Robinson in Paris, Patrick Graham in
London, Lisa Twaronite and Hideyuki Sano in Tokyo; Editing by
Crispian Balmer)
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