GLOBAL MARKETS-Dollar up; stocks, commodities down eyeing Fed

                                
 * Dollar gains as investors reduce short bets
                                
 * Uncertainty over size of Fed economic stimulus
                                
 * Fed may buy few hundred billion dollars of bonds--WSJ
 (Updates with European markets' close, prices, adds Argentine
ADRs)
                                
 By Manuela Badawy
                                
 NEW YORK, Oct 27 (Reuters) - The dollar rose and stocks and
commodities fell on Wednesday on doubts over how aggressively
the Federal Reserve is going to attempt to stimulate the
flagging U.S. economy.
                                
 Investors had been pricing in large-scale bond purchases by
the Fed, which lifted equities, commodities and emerging market
assets in recent weeks while the dollar fell because more Fed
quantitative easing would lower the currency's value, at least
in the short term.
                                
 "The dollar's slide since September has been pricing in
aggressive price action by the Fed to around $1 trillion," said
Omer Esiner, chief market analyst at Commonwealth Foreign
Exchange.
                                
 But market participants have begun to scale back
expectations of the Fed's intentions. The Wall Street Journal
said on Wednesday that the Fed is likely to unveil an
asset-purchase program worth a few hundred billion dollars over
several months. It said officials want to avoid a "shock and
awe" approach in their announcement, expected next week. For
details, see [ID:nTOE69Q02H].
                                
 "Some stabilization, Fed official comments and the Wall
Street Journal article have resulted in investors' paring back
those aggressive expectations. Given the price action, we can
assume they are trimming those short dollar bets," Esiner
said.
                                
 A Reuters survey on Oct. 8 showed U.S. primary dealers
expected the size of the quantitative easing to be between $500
billion and $1.5 trillion.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
 For a survey on size of QE, click          [ID:nNLL8LE6JH]
 For possible FOMC outcomes, click          [ID:nN25168493]
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
                                
 The dollar was up against major currencies, with the U.S.
Dollar Index <.DXY> up 0.47 percent at 78.072.
                                
 The euro <EUR=> was down 0.57 percent at $1.378. Against
the Japanese yen, the dollar <JPY=> was up 0.28 percent at
81.63.
                                
 WORLD STOCKS, COMMODITIES PRESSURED
                                
 The uncertainty over the size and pace of quantitative
easing dampened equities and commodity prices.
                                
 The Dow Jones industrial average <.DJI> was down 124.54
points, or 1.12 percent, at 11,044.92. The Standard & Poor's
500 Index  <.SPX> was down 11.32 points, or 0.95 percent, at
1,174.32. The Nasdaq Composite Index  <.IXIC> was down 12.80
points, or 0.51 percent, at 2,484.49.
                                
 "People care more about quantitative easing than anything
else today," said Michael O'Rourke, chief market strategist at
BTIG LLC in New York.
                                
 "The Fed lowering what it could do should put some pressure
on the risk assets that have been trading with QE as a
catalyst."
                                
 World stocks measured by MSCI All-Country World Index
<.MIWD00000PUS> fell 1.23 percent and MSCI emerging market
benchmark <.MSCIEF> lost 1.79 percent.
                                
 U.S.-listed shares of Argentine stocks surged following
news that the president's husband and predecessor, Nestor
Kirchner, had died. Transportadora de Gas Del Sur S.A. <TGS.N>
soared 11 percent to $4.41 while IRSA Investments and
Representations Inc <IRS.N> added 7.4 percent to $14.95.
                                
 Tokyo's Nikkei average <.N225> added 0.1 percent, helped by
a softer yen.
                                
 Europe's FTSEurofirst 300 <.FTEU3> closed down 0.7 percent
after U.S. data showing weakness in a category of U.S. durable
goods orders and on uncertainty over the outcome of the Fed's
Nov. 2-3 meeting.
                                
 U.S. Treasuries widened losses on news that sales of new
U.S. single-family homes rose more than expected in September,
while prices rose and the supply of homes on the market was the
lowest in 42 years.
                                
 The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 10/32, with the yield at 2.6795 percent. The 2-year U.S.
Treasury note <US2YT=RR> was down 1/32, with the yield at
0.4065 percent. The 30-year U.S. Treasury bond <US30YT=RR> was
down 6/32, with the yield at 4.013 percent.
                                
 Gold prices <XAU=> fell $16.15, or 1.21 percent, to
$1323.20 an ounce as the dollar rose. Gold typically falls when
the dollar strengthens, and vice versa, as a firmer U.S. unit
curbs the metal's appeal as an alternative asset. Like all
dollar-priced commodities, it also becomes more expensive for
other currency holders.
                                
 Crude oil <CLc1> fell $1.26, or 1.53 percent, to $81.29 per
barrel.
 (Additional reporting by Nick Olivari, Ellen Freilich, and
Ryan Vlastelica in New York; Editing by Kenneth Barry)