* World stocks trim losses after Fed ups 2010 forecast
* Safe-haven dollar higher vs currency basket
* Consumer confidence, housing data fail to spur optimism
(Updates with closing prices, FOMC details, bond auction
result)
By Manuela Badawy
NEW YORK, Nov 24 (Reuters) - World stocks pared losses on
Tuesday after the Federal Reserve revised upward its growth
estimates for 2010, while the dollar rose on data showing the
U.S. economy grew at a slower pace than expected in the third
quarter.
World stocks gave back some of its losses after Federal
Reserve officials expressed confidence in the sustainability of
the U.S. economic recovery, even if they do not see employment
picking up soon. [] []
"The minutes to the November 4 FOMC meeting indicated that
Fed officials expressed some concern that low interest rates
may spur excessive risk-taking and/or cause inflation
expectations to become unanchored," said Ward McCarthy,
managing director, fixed-income division at Jefferies & Co.
MSCI's all-country world stock index <.MIWD00000PUS> was
down 0.42 percent, yet it has gained 31.02 percent so far this
year.
The dollar gained momentum after U.S. economic data showed
growth at a 2.8 percent annual rate rather than a previous
forecast of 3.5 percent, suggesting an anemic U.S. economic
recovery.
It was still the fastest pace since the third quarter of
2007, probably ending the most painful U.S. recession in 70
years. []
Yet investors need to see stronger growth to justify the
rally seen in stocks and high-risk high-yielding assets.
"If we want to get this economy going, if we want to get
this economy recovering and add jobs, we're going to want to
see better numbers than we are seeing," said Richard Sparks, a
senior equities analyst with Schaeffer's Investment Research in
Cincinnati.
For a graphic on the U.S. third-quarter GDP, click on
http://graphics.thomsonreuters.com/119/US_GDPTR1109.gif
The Dow Jones industrial average <> ended down 0.16
percent, at 10,433.71. The Standard & Poor's 500 Index <.SPX>
closed down 0.05 percent, at 1,105.65 and the Nasdaq Composite
Index <> fell 0.31 percent, at 2,169.18.
The Dow hit a 13-month high on Monday and the S&P 500 has
risen 22 percent this year.
Other U.S. data showed house prices rose for the fifth
month in September, but the pace of appreciation was less than
expected, according to Standard & Poor's/Case-Shiller report.
U.S. consumer confidence was up in November, after an
unexpected drop in October, but still pointed to weak labor
market sentiment.
"The index showed unexpected marginal improvement, but
there seems to be no improvement whatsoever in the perception
of the labor market which is probably the key issue now. The
good news is it can't get any worse," said Pierre Ellis, senior
economist at Decision Economics in New York.
DOLLAR DAY
The U.S. dollar firmed against a basket of currencies and
weakened against the Japanese yen as the economic data
rekindled the safe-haven allure of both the dollar and yen.
That reduced investor appetite for riskier assets like stocks
and commodities, including higher-yielding currencies.
The dollar index <.DXY> rose 0.04 percent at 75.117, while
the euro <EUR=> was down 0.02 percent at $1.4962. Against the
yen, the dollar <JPY=> was down 0.49 percent at 88.51.
Meanwhile, U.S. Treasury debt prices rose after a $42
billion auction of five-year Treasury notes attracted strong
demand.
"The continued interest in Treasuries is the result of a
lack of alternatives," said Lou Brien, market strategist at DRW
Trading in Chicago. "This is a flight to quantity. It's the
only game in town."
Benchmark 10-year Treasury notes <US10YT=RR> traded 10/32
higher in price to yield 3.3156 percent, down from 3.35 percent
late on Monday.
Earlier, the pan-European FTSEurofirst 300 <> index
of top shares closed 0.7 percent lower at 1,016.66 points after
rising to a high of 1,025.17 earlier in the session.
The index has gained 57 percent since falling to a record
low in early March and is up 22 percent for the year.
Many global stock investors are being cautious heading into
the year-end, wanting to lock in profits after a very good run
in 2009 while also worrying about the true state of the world
economy.
Japan's Nikkei <.225> hit its lowest close in four months,
down 1 percent on the day. Japan's current concerns are focused
on worries financial firms will tap the market for equity
financing and on a stronger yen hurting the shares of
exporters.
(Additional reporting by Ellen Freilich and Richard Leong;
Editing by Diane Craft)
((manuela.badawy@thomsonreuters.com; +1 646-223-6055;
Reuters Messaging: manuela.badawy.reuters.com@reuters.net))
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