* Treasuries sell off as Fed says recovery "slow"
* Dollar gains against euro, yen
* Retail sales data boosts U.S. stocks
(Updates with U.S. markets close)
By Al Yoon and Alina Selyukh
NEW YORK, Dec 14 (Reuters) - U.S. stocks eked out gains and
U.S. Treasuries prices slumped on Tuesday after the U.S.
Federal Reserve showed no signs of curtailing its economic
stimulus measures and U.S. retail sales data signaled an
accelerating economic recovery.
The dollar edged higher against the euro and the yen after
the Fed modestly upgraded its evaluation of the U.S. economic
recovery and reaffirmed its commitment to purchase $600 billion
in government bonds to boost the economy.
"The economic recovery is continuing, though at a rate that
has been insufficient to bring down unemployment," the Fed said
in a statement at the conclusion of a one-day meeting.
The Dow Jones industrial average touched a more than
two-year high, and world stocks inched closer to overall
two-year highs. Benchmark U.S. Treasury 10-year yields hit
their highest levels in since May on signs of accelerating
economic growth.
The government on Tuesday reported that U.S. retail sales
rose for a fifth straight month, and the producer price index,
a measure of business costs, increased more than expected, seen
as a positive sign of demand. For details see [].
"I'm slightly disappointed that the (Fed) doesn't see the
world in the same light that investors do," said Andrew
Wilkinson, senior market analyst at Interactive Brokers in
Greenwich, Connecticut.
"The Fed continues to say that the outlook for employment
and spending isn't as strong as the market perceives it."
Investors also kept their sights on a deal worked out
between U.S. President Barack Obama and Republican lawmakers to
extend tax cuts, jobless benefits and a payroll tax credit,
which is expected to also boost the economy.
Wall Street did temporarily turn negative, weighed by
declining bank shares after the Fed statement as hurt by a
plunge in the stock of Best Buy Inc <BBY.N>, the top U.S.
electronics retailer that is seen a bellwether in consumer
electronics. Best Buy shares fell 15 percent after it reported
a drop in quarterly profit and sales and cut its full-year
outlook, citing weak demand in its key U.S. market.
[]
The Dow Jones industrial average <> was up 47.98
points, or 0.42 percent, at 11,476.54. The Standard & Poor's
500 Index <.SPX> was up 1.13 points, or 0.09 percent, at
1,241.59. The Nasdaq Composite Index <> was up 2.81
points, or 0.11 percent, at 2,627.72.
The S&P 500 index is up 6 percent since Nov. 29.
U.S. Treasuries extended losses after the Fed statement,
adding to a sharp sell-off as the tax deal sparked concern over
faster growth and a widening federal budget gap. U.S. Treasury
10-year yields <US10YT=RR>, which influence consumer and
corporate borrowing costs, rose to 3.44 percent from 3.28
percent late Monday.
GLOBAL OPTIMISM
European shares closed higher for a seventh straight
session, reversing early losses after the U.S. retail sales
data reinforced optimism about the pace of economic recovery.
The FTSEurofirst 300 Index <> finished up 0.3 percent in
thin volume.
The MSCI world equity index <.MIWD00000PUS> edged up 0.24
percent, nudging closer to a two-year high set in November. The
Thomson Reuters global stock index <.TRXFLDGLPU> rose 0.4
percent, and emerging stocks <.MSCIEF> added 0.6 percent.
Currencies fluctuated throughout the day as the dollar
temporarily slipped, bouncing back after Fed's announcement.
The dollar gained 0.15 percent against a basket of major
trading partner currencies <.DXY> and 0.35 percent against the
Japanese yen <JPY=> to 83.69. The euro <EUR=> declined 0.07
percent to $1.338.
As the dollar strengthened, spot <XAU=> gold pared gains
after rallying to its highest in a week, closing up $1.70, or
0.12 percent, at $1394.80 an ounce.
U.S. crude oil futures <2CLc1> also slid after the Fed's
announcement, settling down 33 cents, or 0.33 percent, at
$88.28 per barrel on the New York Mercantile Exchange.
(Additional reporting by Angela Moon and Karen Brettell in New
York and Melanie Burton in London; Editing by Leslie Adler)
