* U.S. stocks trim gains after Federal Reserve statement
* Dollar gains vs yen, euro after 'hawkish' Fed statement
* Oil settles up near $73 a bbl on U.S. crude stocks drop
* U.S. government debt little changed after Fed statement
(Updates with close of U.S. markets)
By Herbert Lash
NEW YORK, Dec 16 (Reuters) - U.S. equities trimmed gains to
trade just above break-even on Wednesday and the U.S. dollar
gained against the yen after Federal Reserve policy-makers
signaled the start to the end of its easy money regime.
The Fed took note of improving conditions for banks and
said it would shutter most of its emergency lending facilities
on Feb. 1, the clearest sign yet it was ready to pull back from
extraordinary efforts to fight the global financial crisis. For
details, see: []
Financial shares, which had initially climbed after sources
said global banking regulators will give institutions a grace
period before enforcing more stringent capital rules, slipped
after the Fed statement. []
"We're not going to have all that free capital that we had
previously," said Dan Cook, senior market analyst at IG Markets
in Chicago. "That will have people concerned heading into the
new year.
"By putting a firm date on the end of some of these
facilities -- which will be coming up quickly -- that might put
a bit of pressure on the stock market in the first part of
2010," Cook said.
The planned removal of economic stimulus hurt Brazilian
stocks, which closed down almost 1 percent, on investor worries
about the carry trade -- using cheap dollar funding to buy
higher-yielding, but riskier assets.
The Fed had guaranteed liquidity in the markets, which
encouraged risk-taking and the purchase of assets perceived as
risky, said Sebastien Galy, senior currency strategist BNP
Paribas in New York.
"The message from the Fed is positive in recognizing that
the economy has evolved," said Marcelo Portilho, a strategist
with CM Capital Markets in an on-line conversation.
"But the view of less stimulus (in the future) could leave
the market doubtful over the short term," he said. "The markets
want stimulus."
The Dow Jones industrial average <> closed down 10.88
points, or 0.10 percent, at 10,441.12. The Standard & Poor's
500 Index <.SPX> rose 1.25 points, or 0.11 percent, at
1,109.18. The Nasdaq Composite Index <> gained 5.86
points, or 0.27 percent, at 2,206.91.
Market reaction to the Fed statement was muted outside of
the currencies and stocks.
U.S. Treasury debt prices were little changed but copper
prices rallied to a one-week high and maintained a bullish tone
in after-hours trade despite the slightly firmer dollar.
Treasuries, which had earlier risen following a downgrade
of Greece's sovereign debt as well as fresh data showing low
U.S. inflation, sank back to levels near Tuesday's close.
Benchmark 10-year notes <US10YT=RR> were down 2/32 to yield
3.60 percent.
The dollar was down against a basket of major currencies,
with the U.S. Dollar Index <.DXY> down 0.09 percent at 76.893.
The euro <EUR=> was unchanged at $1.4533, and against the
yen, the dollar <JPY=> was up 0.18 percent at 89.78.
Oil surged to near $73 a barrel after data showed crude
stocks in the United States fell more than expected last week,
easing concerns about flagging demand.
The U.S. Energy Information Administration, the statistical
arm of the Department of Energy, said crude inventories
declined by 3.7 million barrels last week, eclipsing analysts
expectations for just a 1.8 million barrel decline. []
Crude for January delivery <CLc1> settled up $1.97 a barrel
at $72.66, after rising to as much as $73.55 a barrel earlier.
London Brent crude <LCOc1> rose $1.50 to $73.55 a barrel.
Spot gold prices <XAU=> rose $13.80 to $1137.80 an ounce.
Before the Fed statement shares of major Japanese banks
surged and European bank shares <.SX7P> rose on relief that
banks will have more time to adjust to new rules being drafted
by the Basel Committee on Banking Supervision. []
Three people with knowledge of the matter said the
committee would stick to a plan to gradually implement changes
starting in 2012, and give banks a transition period.
The Nikkei share average closed at a seven-week high, up
0.9 percent <>, leading Asian stock markets on speculation
banks may not have to raise more capital in the near term.
The MSCI index of Asia Pacific stocks outside Japan was
down 0.8 percent <.MIAPJ0000PUS>, weighed down by the materials
and consumer staples sectors.
(Reporting by Chuck Mikolajcz, Steven C. Johnson, Joshua
Schneyer, Emily Flitter and Ellen Freilich in New York; Atul
Prakash, Tamawa Desai and Jan Harvey in London and Luciana
Lopez in Sao Paulo; writing by Herbert Lash; Editing by
Theodore d'Afflisio)
