* Fed statement lifts dollar
* Euro hit by Fed, Greece
* World stocks slips led by banks
By Jeremy Gaunt, European Investment Correspondent
LONDON, Dec 17 (Reuters) - The dollar hit jumped against
other currencies, particularly sterling and the euro, following
a slightly more optimistic assessment about the U.S. economy
from the Federal Reserve.
World stocks fell nearly 1 percent, with banks taking a hit
at the prospect of less liquidity pumping from the U.S. central
bank and others.
The Fed's policy-making committee left rates unchanged as
expected on Wednesday but reminded markets it will let most of
the special liquidity facilities, which have helped bolster the
U.S. banking system after last year's credit crisis, expire by
early next year. []
Prospects that this will bring tighter monetary policy
earlier than expected triggered an unwinding of short dollar
positions ahead of the new year.
The euro was also hurt by Standard & Poor's cutting Greece's
rating by one notch, to BBB-plus from A-minus, late on
Wednesday. It said austerity steps announced by Prime Minister
George Papandreou this week were unlikely to produce a
"sustainable" reduction in the public debt burden.
"The problem for the euro is the mix of the (Fed) statement
and the very strong concerns over Greece.... All the euro
crosses have suffered," said Roberto Mialich, FX strategist at
Unicredit in Milan.
The euro was down 1.3 percent against the dollar at $1.4348,
touching September lows <EUR=>.
The dollar, however, was stronger generally, touching three-
month highs against a basket of major currencies, up 0.7 percent
on the day <.DXY>. Sterling lost 1.5 percent to $1.6085 <GBP=>.
STOCKS WOBBLE
World stocks fell with MSCI's all-country index down 0.9
percent <.MIWD00000PUS> and its emerging market component off
1.1 percent <.MSCIEF>.
In Europe, the FTSEurofirst 300 <> index was down 0.7,
having hit a one-month closing high on Wednesday.
The heavyweight banking sector took most points off the
index. BNP Paribas <BNPP.PA>, Banco Santander <SAN.MC>, Barclays
<BARC.L> and HSBC <HSBA.L> were among the big losers.
Equities have had a robust year, especially since March, but
are now becoming more volatile ahead of year-end and with large
questions pending about 2010.
"Markets are still trying to find a trend and establish
whether the improvement in the economy is due to stimulus
packages," said Justin Urquhart Stewart, investment director at
Seven Investment Management.
Earlier, Japan's Nikkei average <> ended down 0.1
percent, slipping from seven-week highs as investors pocketed
profits on a rally in big banks such as Mitsubishi UFJ Financial
Group <8306.T>.
On euro zone bond markets, the two-year Schatz yield
<EU2YT=RR> fell 7 basis points to 1.158 percent, while the
10-year Bund yield <EU10YT=RR> slipped to 3.152 percent.
(Additional reporting by Brian Gorman and Jessica Mortimer;
editing by Stephen Nisbet)
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