* U.S. stocks rebound on Fed policymakers' notes
* Dollar weakens, euro rallies on quantitative easing view
* Gold recoups some losses as oil stays below $82 a barrel
* U.S. Treasury prices slip on quantitative easing outlook
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, Oct 12 (Reuters) - U.S. stocks rebounded and the
dollar eased on Tuesday on news that policymakers at the last
meeting of the Federal Reserve suggested they are closer to
increasing money supply to revive a struggling U.S. economy.
Markets reversed course after minutes from the Sept. 21
meeting of the Federal Open Market Committee showed officials
discussed several ways to aid the economy but focused on buying
additional longer-term Treasury securities. For details see:
[]
Fed policymakers also discussed how to nudge the public
into expecting higher levels of inflation in the future, which
would inflate asset prices, especially commodities and stocks.
The euro rallied against the dollar and Wall Street snapped
back, aided by a higher price target for Apple Inc and comments
by Lee Ainslie, a well-known hedge fund manager, who said
technology stocks are the cheapest they have been in 20 years.
The view from Fed policymakers contrasted sharply with
comments by European Central Bank Governing Council member Axel
Weber, who said the ECB's government bond-buying program has
not worked and should be scrapped. []
The euro <EUR=> was up 0.32 percent at $1.3918, well off
the session low of $1.3775.
Expectations that the Fed is poised to bolster the economy
has spurred a worldwide equity rally. The S&P 500 index is up
11.3 percent since the start of September, and last month's
performance was one of the best months for stocks in a decade.
MSCI's all-country world equity index <.MIWD00000PUS> has
posted a 12.1 percent gain since the beginning of September.
The index pared a 1 percent loss to close down 0.2 percent.
"It looks like the Fed is moving closer to another round of
quantitative easing," said Michael Sheldon, chief market
strategist at RDM Financial in Westport, Connecticut.
"The Fed has almost boxed themselves into a corner in the
sense that the market expects some type of activity. The only
question is, 'How much and when?'" Sheldon said.
Trading in Tokyo was poised to open lower, with the
December futures contract that trades in Chicago for the Nikkei
225 <0#NK:> down 180 points at 9,475.
The Dow Jones industrial average <> closed up 10.06
points, or 0.09 percent, at 11,020.40. The Standard & Poor's
500 Index <.SPX> rose 4.45 points, or 0.38 percent, to
1,169.77. The Nasdaq Composite Index <> gained 15.59
points, or 0.65 percent, to 2,417.92.
Spot gold <XAU=> fell $2.60 to $1,350.30 an ounce,
recouping part of earlier losses.
U.S. Treasury debt prices eased after lackluster demand in
an auction of three-year notes spurred some worries over the
potential success of remaining debt auctions this week.
Losses were limited, however, because of the notion the Fed
will go ahead with another program of quantitative easing in
the near future, which many expect will include an expansion of
Treasury debt purchases.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 8/32 in price to yield 2.42 percent. The 2-year U.S.
Treasury note <US2YT=RR> slipped 2/32 in price to yield 0.367
percent.
Oil slid for a second day, falling below $82 a barrel after
Saudi Arabia signaled the Organization of Petroleum Exporting
Countries would maintain current production levels, while gold
eased on the dollar's bounce. [] []
Saudi Arabian Oil Minister Ali al-Naimi said on Monday he
was happy with the oil market as he arrived in Vienna for the
first OPEC meeting in seven months, set for Thursday.
[]
U.S. crude for November <CLc1> settled down 54 cents at
$81.67 a barrel. In London, ICE Brent <LCOc1> settled down 22
cents at$83.50.
The euro swung wildly between gains and losses throughout
the session but finally settled in positive territory after the
Fed minutes were released.
"The comments support and reinforce the view that there
will be Fed policy action at the November meeting," said Nick
Bennenbroek, head of FX strategy at Wells Fargo in New York.
"This seems to be the consensus now and so we're seeing the
euro gaining against the dollar."
The dollar fell against a basket of major currencies, with
the U.S. Dollar Index <.DXY> down 0.14 percent at 77.337.
Against the Japanese yen, the dollar <JPY=> was down 0.32
percent at 81.82.
In Asia, Japan's Nikkei <> closed down 2.1 percent at
9,388.64, while Asian stocks were down 1.3 percent, according
to the MSCI Asia ex-Japan index <.MIAPJ0000PUS>.
(Reporting by Rodrigo Campos, Nick Olivari, Wanfeng Zhou,
Emily Flitter in New York; Writing by Herbert Lash; Editing by
Dan Grebler)
