* Treasuries sell off as Fed says recovery "slow"
* Dollar gains against euro, yen
* Retail sales data boost to U.S. stocks fades after Fed
(Updates to add reaction to Fed statement)
By Al Yoon and Alina Selyukh
NEW YORK, Dec 14 (Reuters) - World stocks firmed and U.S.
Treasuries prices slumped on Tuesday after the U.S. Federal
Reserve reaffirmed its commitment to purchase $600 billion in
bonds to boost the economy, following the positive track set by
stronger-than-expected U.S. consumer spending numbers.
The dollar edged higher against the euro and the yen after
the Fed -- the U.S. central bank -- modestly upgraded its
evaluation of the U.S. economic expansion.
"The economic recovery is continuing, though at a rate that
has been insufficient to bring down unemployment," the Fed said
in a statement at the conclusion of a one-day meeting.
World stocks neared a two-year high set last month, and
benchmark U.S. Treasury 10-year yields hit their highest levels
in more than six months on signs of accelerating economic
growth. Data released on Tuesday showed U.S. retail sales
rising for a fifth straight month and the producer price index
beating expectations. For details see [].
However Wall Street stocks faded late in the trading day.
"I'm slightly disappointed that the (Fed) doesn't see the
world in the same light that investors do," said Andrew
Wilkinson, senior market analyst at Interactive Brokers in
Greenwich, Connecticut.
"The Fed continues to say that the outlook for employment
and spending isn't as strong as the market perceives it."
Investors are also eyeing another potential boost to the
economy in the form of a deal worked out between U.S. President
Barack Obama and Republican lawmakers to extend tax cuts,
jobless benefits and a payroll tax credit.
Shares of Best Buy Inc <BBY.N>, the consumer electronics
bellwether, tumbled 16 percent, weighing on the market. Best
Buy, the leading U.S. electronics retailer, reported a drop in
quarterly profit and sales and cut its full-year outlook,
citing weak demand in its key U.S. market. []
The Dow Jones industrial average <> was up 29.82 points,
or 0.26 percent, at 11,458.38. The Standard & Poor's 500 Index
<.SPX> was down 1.42 points, or 0.11 percent, at 1,239.04. The
Nasdaq Composite Index <> was down 2.17 points, or 0.08
percent, at 2,622.74.
U.S. Treasuries extended losses after the Fed statement,
adding to a sharp sell-off as the tax deal sparked concern over
faster growth and a widening federal budget gap. U.S. Treasury
10-year yields <US10YT=RR>, which influence consumer and
corporate borrowing costs, rose to 3.48 percent from 3.28
percent late Monday.
GLOBAL OPTIMISM
European shares pared losses after the early U.S. data,
which affirmed a stocks rally that has pushed up the S&P 500
index by 6 percent since Nov. 29. European stocks gained for
the seventh straight session on thin volume, with the
FTSEurofirst 300 Index <> up 0.3 percent.
The MSCI world equity index <.MIWD00000PUS> edged up 0.1
percent and the Thomson Reuters global stock index
<.TRXFLDGLPU> rose 0.4 percent, nudging the MSCI index closer
to a two-year high set in November. Emerging stocks <.MSCIEF>
added 0.6 percent.
Currencies fluctuated throughout the day as the dollar
temporarily slipped, bouncing back after Fed's announcement.
The dollar gained 0.16 percent against a basket of major
trading partner currencies <.DXY>.
The euro <EUR=> declined 0.09 percent to $1.3377. The
dollar rose 0.4 percent to 83.73 yen <JPY=>.
U.S. crude oil futures <CLc1> also slid after the Fed's
announcement, settling down 33 cents, or 0.37 percent, at
$88.28 percent on the New York Mercantile Exchange. Gold <XAU=>
rose $5.55, or 0.4 percent, to $1,398.70 an ounce.
(Additional reporting by Natsuko Waki in London and Angela
Moon in New York; Editing by James Dalgleish)
