* World shares turn down, shine fades from Obama stimulus
* Fed stands pat on rates, holds back from buying Treasuries
* Yen, dollar buoyed as global worries at fore
* Kiwi hits 6-yr low after rates slashed to record low
(Changes dateline, byline, adds quotes, updates prices PVS
HONG KONG)
By Veronica Brown
LONDON, Jan 29 (Reuters) - World shares fell on Thursday,
while the low-yielding dollar and yen rose as hopes for the
approval of a $825 billion U.S. stimulus package failed to
galvanise European investors.
European shares faltered after gains in U.S. and Asian
stocks overnight, snapping a three-day winning streak, dragged
down by the banking and commodity sectors.
Government bonds slid, taking U.S. benchmark yields to a
six-week peak after the Federal Reserve shied away for now from
buying Treasuries as part of its aggressive policy easing to
relieve credit market strains.
It stood pat on interest rates -- keeping borrowing costs at
between 0-0.25 percent and said they could stay unusually low
for some time.
President Barack Obama's $825 billion stimulus package
cleared its first congressional hurdle in Congress
[] but analysts said the package still had a
potentially bumpy road ahead.
"The package is an encouraging sign, but in itself it does
not solve anything," said Justin Urquhart Stewart, director at
Seven Investment Management.
Europe's FTSEurofirst 300 Index fell 1.6 percent <>,
while world stocks as measured by MSCI's all-country index fell
0.6 percent <.MIWD00000PUS>.
In currency markets, the dollar and yen rose reflecting deep
wariness over risk despite the Obama package clearing its first
hurdle.
The euro fell 0.7 percent on the day to $1.3041 <EUR=>,
while the dollar rose half a percent against a basket of
currencies to 85.000 <.DXY>.
Yen strength pulled the euro down 1 percent to 117.40 yen
<EURJPY=>, while the dollar eased 0.4 percent to 90.03 yen
<JPY=>.
"We are seeing a reduction of risk appetite which benefits
the dollar and yen for its perceived safe-haven credentials,"
said Christian Lawrence, currency strategist at RBC Capital
Markets in London.
New Zealand's dollar fell as low as $0.5130 <NZD=D4>, the
lowest since December 2002 according to Reuters data, after its
central bank slashed interest rates by 150 basis points to a
record low of 3.5 percent to boost an economy deep in recession
[].
European government bonds fell, while the yield on benchmark
U.S. 10-year Treasuries hit a 6-week high after the Federal
Reserve shied away from buying longer-dated debt for now.
March Bund futures <FGBLH9> were 32 ticks lower at 122.74,
with 10-year cash yields <EU10YT=RR> 2.7 basis points higher at
3.261 percent.
U.S. 10-year Treasuries <US10YT=RR> dipped in Asian trade
with the yield reaching a peak of 2.700 percent.
(Additional reporting by Eric Burroughs in Hong Kong, Joanne
Frearson and Tamawa Desai in London)
(Reporting by Veronica Brown; Editing by Patrick Graham)
