* Euro falls to 6-month low vs dollar on Greece concerns
* Bond prices slip after Fed dissenter sparks rate worries
* Oil falls below $74 a barrel after U.S. inventory data
* U.S. equities rebound after upbeat Fed view of economy
(Updates with close of U.S. markets, changes byline; dateline
previously LONDON)
By Herbert Lash
NEW YORK, Jan 27 (Reuters) - The U.S. dollar surged a
six-month high against the euro amid rising risk aversion on
Wednesday but U.S. stocks rebounded during the session after
the Federal Reserve provided an upbeat reading of the economy.
U.S. government debt prices slipped after one policy-maker
dissented from the Fed's decision to leave interest rates near
zero, a telltale sign for investors that plans to keep rates
low for the foreseeable future may be under pressure. For
details see: []
The Fed said the U.S. economy has continued to strengthen
and it reiterated plans to end emergency dollar swaps with
other central banks. The Fed has kept rates at record lows to
nurture an economic recovery held back by high unemployment.
"The statement is overall a positive one. The Fed is saying
they have enough confidence in the markets to let the liquidity
measures expire as expected," said Kurt Karl, chief U.S.
economist at Swiss Re in New York.
The euro <EUR=> extended losses and fell below $1.40 for
the first time since July after the Fed's statement. Worries
about Greece's fiscal health also hurt the euro.
The Fed's decision was not surprising but the somewhat more
optimistic tone of its statement shifted sentiment after a wave
of unexpected news from Washington the past two weeks caused
the stock market to buckle. []
The Fed statement boosted stocks while the technology-rich
Nasdaq got a late surge from a gain of 1 percent in the shares
of Apple Inc <AAPL.O> after the iPad's debut. []
"The market rallied because there wasn't anything overtly
negative that could be taken from the Fed statement," Michael
James, senior trader at regional investment bank Wedbush Morgan
in Los Angeles.
"We've been hit by so many negative bits of news (lately),
whether from Washington or China, that there was some relief
that there wasn't anything overtly negative that could be
construed from the Fed statement."
The Dow Jones industrial average <> closed up 41.87
points, or 0.41 percent, to 10,236.16. The Standard & Poor's
500 Index <.SPX> rose 5.33 points, or 0.49 percent, to
1,097.50. The Nasdaq Composite Index <> climbed 17.68
points, or 0.80 percent, to 2,221.41.
Earlier, stocks traded lower ahead of the Fed's policy
announcement and as investors awaited U.S. President Barack
Obama's first State of the Union address at 9 p.m. (0200 GMT
Jan. 28). Obama is expected to promise more jobs creation and a
slimmed budget deficit.
U.S. stocks also fell after sales of newly built homes
dropped unexpectedly in December, the latest indication that a
government-led housing recovery might be losing some steam.
[]
Oil prices dipped, pressured by rising U.S. product
inventories builds due to ongoing weak U.S. demand.
[]
U.S. oil for March delivery <CLc1> settled at $73.67 a
barrel, down $1.04, briefly dipping below the 200-day moving
average of $73.66. Oil prices have fallen from above $83 a
barrel on Jan. 11.
In London, ICE Brent crude for March <LCOc1> settled at
$72.74 a barrel, down $1.05.
"We are moving from a situation of crude oil oversupply to
one of product oversupply. Fuel demand is just not strong
enough to work off these product stocks, even though refineries
are running at relatively low rates," said Brad Samples, an
analyst at Summit Energy in Louisville, Kentucky.
Concerns over Greece also had weighed on markets. Greece
denied press reports it had chosen Goldman Sachs <GS.N> to sell
up to 25 billion euros ($35 billion) of bonds to China, though
it reiterated plans for an investor roadshow in Asia.
Greek government bonds were crushed after the denial.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 8/32 in price to yield 3.65 percent.
The dollar was up against a basket of major currencies,
with the U.S. Dollar Index <.DXY> up 0.37 percent at 78.723.
Against the yen, the dollar <JPY=> was down 0.36 percent at
89.94.
U.S. February gold futures <GCG0> settled down $13.80 at
$1,084.50 an ounce in New York.
Asian stocks fell for the eighth straight day on Wednesday
on fears that China's heightened efforts to rein in soaring
credit growth could hamper the global economic recovery.
The MSCI index of Asia Pacific stocks outside Japan
<.MIAPJ0000PUS> fell 1.3 percent, while Japan's Nikkei average
<> fell 0.7 percent to a five-week low.
(Reporting by Chuck Mikolajczak, Rebekah Kebede, Ellen
Freilich and Steven C. Johnson in New York; Chris Baldwin,
Joanne Frearson in London; writing by Herbert Lash; Editing by
Diane Craft)
