GLOBAL MARKETS-Dollar, stocks slip as Fed signals slow growth

(Adds U.S. market close)
* Federal Reserve to keep low rates at least through 2022
* Nasdaq hits fresh highs on low rate environment outlook
* Oil rebounds even as inventories rise
*

By Herbert Lash
NEW YORK, June 10 (Reuters) - The dollar slid to a
three-month low and a gauge of global stocks fell on Wednesday
after the Federal Reserve projected a more sluggish recovery
than the market expected, but the Nasdaq hit a fresh high on
expectations of low interest rates past 2022.
The greenback fell to three-month troughs against the euro,
sterling and Swiss franc after the end of a two-day meeting of
the Fed's policy-setting committee, in which it repeated its
promise of continued extraordinary support for the economy.
Policymakers projected a 6.5% decline in gross domestic
product this year and a 9.3% unemployment rate at year's end.
The key overnight interest rate, or federal funds rate, would
remain near zero through at least 2022, a Fed statement said.
"What they're looking at is a rebound that is going to take
at least until 2022. That fits maybe a little
worse-than-expected consensus," said Marvin Loh, senior global
macro strategist at State Street Global Markets in Boston.
MSCI's gauge of stocks across the globe .MIWD00000PUS shed
0.27% while the Dow industrials and benchmark S&P 500 closed
lower. But the Nasdaq rose as low interest rates are good for
growth-oriented companies that may take longer to turn
profitable, such as Amazon.com as it grew, Loh said.
"They're longer duration-type companies that benefit from a
good growth profile. Their earnings are further out," he said.
After last week's surprisingly upbeat jobs report, with the
economy adding 2.5 million jobs in May as opposed to forecasts
of payrolls falling by 8 million, some investors had hoped for a
rosier outlook.
Low rates, however, will hurt banks and their loan
portfolios. An S&P subsector of banking shares .SPXBK fell
5.8% in its biggest daily percentage decline since April 15,
while the S&P 500 financial sector .SPSY was the biggest drag
on the overall index.
The Dow Jones Industrial Average .DJI fell 282.31 points,
or 1.04%, to 26,989.99. The S&P 500 .SPX lost 17.04 points, or
0.53%, to 3,190.14 and the Nasdaq Composite .IXIC added 66.59
points, or 0.67%, to 10,020.35.
U.S. Treasury yields fell as the Fed promised to maintain
bond purchases at "the current pace" of about $80 billion per
month in Treasuries and $40 billion per month in agency and
mortgage-backed securities. Benchmark 10-year Treasury yields US10YT=RR fell 9 basis
points to 0.744%. Two-year yields US2YT=RR , which are the most
sensitive to rate changes, fell 3 basis points to 0.177%.
The dollar fell about 0.4% against a basket of major
currencies to 95.882 =USD , after earlier sliding to 95.714, a
level not seen since mid-March.
The euro EUR= rose as high as $1.1422 and sterling GBP=
reached $1.2812, with the dollar hitting a three-month low of
0.9425 franc CHF= versus the Swiss currency.
Oil rebounded from earlier losses, even as U.S. data showed
crude inventories rose to a record high, reviving worries of a
persistent glut due to weak demand.
Crude stocks rose by 5.7 million barrels in the week to June
5 to 538.1 million barrels, according to a U.S. Energy
Information Administration report. EIA/S
Brent crude LCOc1 settled up 55 cents to $41.73 a barrel.
U.S. West Texas Intermediate (WTI) CLc1 rose 66 cents to
$39.60 after falling more than 2% in the session.
Demand remains subdued as seen in U.S. consumer prices,
which fell for a third straight month in May, with underlying
inflation weak. The consumer price index dipped 0.1% last month
after plunging 0.8% in April, the largest decline since December
2008. But copper prices rose for a fifth straight session to their
highest since January as the metal, which is widely used in the
construction and power industries, has been supported by firm
demand and an improved technical picture.
Benchmark copper CMCU3 on the London Metal Exchange (LME)
was up 0.8% at $5,822 per tonne in official trading.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS advanced 0.66% for its 10th straight session of
gains.

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