* US stocks dip, Treasuries rally, commodities fall
* Fed's economic view points to low rates for long time
* US new home sales hit record low, add to growth fears
* Concerns over Europe's banks spur sales of risky assets (Updates with U.S. markets' close)
By Walter Brandimarte
NEW YORK, June 23 (Reuters) - The dollar weakened across the board while Treasuries rallied on Wednesday after the U.S. Federal Reserve acknowledged a faltering economic recovery and data showed sales of new U.S. homes fell to a lifetime low.
U.S. stocks, which traded mostly down since the market's open, zigzagged and closed mostly lower after the Fed issued its monetary policy statement, which suggested interest rates will remain near zero longer than expected.
The Dow industrials, however, eked out a tiny gain just as the regular sesssion ended.
In the statement, U.S. policy-makers repeated that the economy will continue to gradually emerge from recession, but took note of pockets of economic weakness. [
]Without directly mentioning Europe's debt problems, they said financial conditions have become less supportive of growth, "largely reflecting developments abroad."
"There's no rate hike expected for the foreseeable future - at least not until the end of the year, if not 2011," said Michael Woolfolk, senior currency strategist at BNY Mellon in New York. "The longer the Fed keeps kicking the can down the road, the less positive this is for the U.S. dollar outlook."
The dollar slid 0.37 percent against a basket of major trading-partner currencies, according to the U.S. Dollar Index <.DXY>.
The euro <EUR=>, which had weakened earlier on renewed fears about the European banking system, gained 0.36 percent to $1.2313.
Against the Japanese yen, the U.S. currency <JPY=> slid 0.80 percent to 89.84.
Concerns about the pace of the economic recovery were on the rise since the beginning of the session, when government data showed sales of U.S. single-family homes dropped 32.7 percent in May to a seasonally adjusted annual rate of 300,000 units, the lowest level since record keeping started in 1963.
The drop unwound two months of gains, which had been inspired by a government tax credit for home buyers, and increased investors' aversion to risk in general.
WHEN DOVES FLY, THE DOW RISES
While the Fed's softened economic view weighed on sentiment, prospects of a prolonged period of near-zero interest rates in the United States offered some support to stocks, tipping the Dow into positive territory in late afternoon.
The Dow Jones industrial average <
> edged up 4.92 points, or 0.05 percent, to end at 10,298.44, while the Standard & Poor's 500 Index <.SPX> dropped 3.27 points, or 0.30 percent, to 1,092.04. The Nasdaq Composite Index < > fell 7.57 points, or 0.33 percent, to 2,254.23"Just when one thought the FOMC couldn't get more dovish, they get more dovish, specifically on inflation," said Peter Boockvar, equity strategist at Miller Tabak & CO in New York. "Rates will stay 'exceptionally low' for a very, very, very, very long time."
In Europe, the FTSEurofirst 300 index <
> of top shares closed down 1.02 percent before the Fed statement, with technical charts suggesting there could be more declines over the coming days."We have fallen back after U.S. new home sales data and, in this context, we expect the market to continue to go lower over the next week," said Christian Stocker, strategist at UniCredit Global Research in Munich.
Financial stocks ranked among the top decliners in Europe, with Barclays <BARC.L>, BNP Paribas <BNPP.PA>, Credit Agricole <CAGR.PA> and Societe Generale <SOGN.PA> down 1.4 percent to 3.2 percent.
Concerns about Europe's banking system were on the rise after Credit Agricole pushed back profit targets for its struggling Greek unit Emporiki <CBGr.AT> and said it would take a 400-million-euro ($536.7 million) write-down as Greece fights to manage its debt load. [
]MSCI's all-country stock index <.MIWD00000PUS> dropped 0.83 percent, while the firm's index of emerging market stocks <.MSCIEF> fell 0.76 percent.
BONDS JUMP, OIL AND GOLD SLIP
Benchmark 10-year U.S. Treasury notes <US10YT=RR> jumped 11/32, with the yield falling to 3.12 percent from Tuesday's close of 3.17 as the Fed said in its statement that "inflation is likely to be subdued for some time."
The yield curve also flattened as investors bought longer-dated Treasuries on the rationale that they would be a safe place to park savings in a deteriorating economic environment.
The more dovish Fed tone could also lead some investors to wonder whether the U.S. central bank might restart its quantitative easing program of Treasuries purchases if the data begins a sharper downturn from here.
U.S. crude oil futures prices <CLc1> fell $1.50, or 1.93 percent, to settle at $76.35 a barrel, also pressured by a sharp increase in domestic crude stocks last week and a forecast from the International Energy Agency that supplies would be comfortable for the next five years.
Gold prices shrugged off the Fed's view. In late afternoon trading, spot gold <XAU=> traded at $1,234.55 an ounce, close to where it was on Tuesday in late New York trading, when it was quoted at $1.239. (Reporting by Walter Brandimarte; Additional reporting by Ryan Vlastelica, Burton Frierson and Gertrude Chavez-Dreyfuss; Editing by Jan Paschal)