* Wall Street gloomy on Fed warning on growth
* Euro stocks, bonds rally after ECB offers 1-year funds
* Treasuries fall after Fed does not expand asset buying
* Dollar broadly higher, Fed, Swiss intervention help
By Steven C. Johnson
NEW YORK, June 24 (Reuters) - The Dow industrials slumped
for a fourth straight day on Wednesday and U.S. government
bonds also fell after the Federal Reserve revived concern about
the economy and and did not extend programs to buy Treasury or
mortgage debt.
The dollar rose broadly, with the euro falling after the
European Central Bank lent banks nearly half a trillion euros
in its first one-year tender. Traders also said the Swiss
National Bank intervened in the currency market to weaken the
Swiss franc against the U.S. currency.
Wall Street pared its gains after the Fed said the U.S.
economy would remain weak for some time, though some investors
took heart from surprisingly strong data earlier on orders for
U.S. durable goods, such as appliances and computers, in May.
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"The Fed is a little more downbeat than the market has
been. That they're emphasizing the weakness is a touch
disappointing to me and to the markets," said Jim Awad,
managing director at Zephyr Management in New York.
Bonds reacted more negatively to the Fed's decision not to
add to its asset purchase program, launched in March to keep
long-term interest rates from rising too high and threatening a
fragile U.S. economy.
The Dow Jones industrial average <> fell 23.05 points,
or 0.28 percent, at 8,299.86. Other indexes fared a bit better
but were well off the day's highs. The Standard & Poor's 500
Index <.SPX> ended up 5.84 points, or 0.65 percent, at 900.94
while the Nasdaq Composite Index <> rose 27.42 points, or
1.55 percent, at 1,792.34.
On the bond market, the benchmark 10-year U.S. Treasury
note <US10YT=RR> was down 18/32 in price, with the yield just
below 3.70 percent, while the 2-year U.S. Treasury note
<US2YT=RR> was up 8/32, with the yield near 1.22 percent.
ECB TENDER, SWISS INTERVENE
The dollar rallied, with the euro dipping nearly 1 percent
to $1.3943 <EUR=> after the ECB lent euro zone banks 442.241
billion euros ($612.8 billion) in a 371-day operation at a
fixed 1 percent -- well above the 300 billion forecast in a
Reuters poll. []
"This is a very supportive feature for the day," said Mike
Lenhoff, strategist at Brewin Dolphin, in London. "It suggests
that there is money going into the economy, and that is exactly
what the central banks want to do to reflate the global
economy."
The pan-European FTSEurofirst 300 <> index of top
shares closed 2.4 percent higher at 853.56. The index had lost
3.2 percent in the previous two sessions.
Euro zone interest rate futures rose and shorter-dated
government bond yields hit session lows, steepening the yield
curve after the ECB tender.
On the volatile foreign exchange market, the U.S. dollar
also jumped around 3 percent against the Swiss franc <CHF=>
after traders reported the Swiss National Bank was intervening
in the market by selling the Swiss currency for dollars and
euros. The SNB declined to comment.
Traders said the bank was selling francs in significant
amounts, with some saying the sales were conducted through the
Basel-based Bank for International Settlements.
A five-year U.S. Treasury note <US5YT=RR> auction totaling
$37 billion on Wednesday was strong and generated solid demand.
Meanwhile, oil fell 0.8 percent to below $68.67 a barrel
<CLc1>, following a 2.6 percent gain in the previous session.
(Additional reporting by Mike Dolan in London and Wanfeng Zhou
and Leah Schnurr in New York; Editing by James Dalgleish)
