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Wall Street ends with modest decline after Fed

US stocks closed with slight losses today, finishing off their lows of the session, after the Federal Reserve ended its stimulative monthly bond-buying program and expressed confidence in US economic prospects.

Major indexes were volatile following the central bank's statement, with the S&P 500 down as much as 0.8 percent before pulling back. Material shares were lower throughout the session, a decline in Facebook pressured the Nasdaq, but strength in energy and financial shares helped the market recover.

In a statement after a two-day meeting, the Fed ended its quantitative easing program of bond purchases, as had been expected. At its peak, the program pumped $85 billion a month into the financial system. The Fed also dropped a characterization of US labor market slack as "significant" in a show of confidence in the economy's prospects.

The Dow Jones industrial average fell 31.44 points, or 0.18 percent, to 16,974.31, the S&P 500 lost 2.75 points, or 0.14 percent, to 1,982.3 and the Nasdaq Composite dropped 15.07 points, or 0.33 percent, to 4,549.23.

Southern European shares lagged small gains in pan-European indexes as weak results from heavyweight bank BBVA offset optimism ahead of a Federal Reserve's policy announcement.

Spanish bank BBVA fell 4.1 percent as it reported a lower-than-expected net profit for the first nine months of the year and the pace of an ongoing turnaround at the lender disappointed analysts and investors.

The stock was the biggest drag on Euro STOXX banking index , which fell 3.1 percent and took its fall since the publication of the European Central Bank's stress tests over the weekend to 4 percent.

The broader FTSEurofirst 300 index of top European shares closed up 0.2 percent at 1,319.34 points, rising for the fourth of the last seven sessions, albeit in declining volume. Trading volume on the index was nearly 10 percent lower than its average for the past month.

Meanwhile, Japanese stocks rose 1.5 percent to a three-week high today, buoyed by hopes that the US Federal Reserve will reiterate its willingness to wait some time before hiking interest rates and by stronger-than-expected domestic industrial data.

Japan's $1.1-trillion public pension fund has pulled back from Japanese bonds in the most recent quarter, allowing domestic bonds to fall below half of its portfolio for the first time.

By shifting funds out of JGBs, GPIF would have freed up funds for higher-yielding and riskier assets such as equities which it is expected to emphasise as part of an ongoing strategy review.

The Nikkei share average ended 224.00 points higher to 15,553.91, the biggest daily percentage gain in a week.

The broader Topix gained 1.5 percent to 1,270.64, and the JPX-Nikkei Index 400 also added 1.5 percent to 11,565.18.

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Tags:  Stocks  shares  FTSEurofirst  Nikkei  US  Dow Jones  





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