GLOBAL MARKETS-U.S. GDP data disappoints; euro and gold up

Wed Jan 30, 2013 7:49pm GMT

* Fed says growth pause largely temporary
    * Financial markets strains ease, business investment up
    * U.S. stocks little changed after Fed statement
    * Longer-dated U.S. Treasuries slightly pare losses

    NEW YORK, Jan 30 (Reuters) - The euro climbed to a 14-month
high, gold rallied and longer- dated U.S. Treasuries pared
losses on Wednesday after the Federal Reserve left its monthly
$85 billion bond-buying stimulus plan in place. 
    The Fed said economic growth had stalled but indicated the
pullback was likely temporary, describing the nation's job
market as continuing its modest pace of improvement. It repeated
a pledge to keep purchasing securities until the outlook for
employment improves substantially..
    A report earlier in the day showing the U.S. economy
contracted in the fourth quarter had already bolstered
expectations the Fed would continue its easy monetary policy.
    GDP  data, which showed the world's largest economy in the
fourth quarter unexpectedly suffered its first decline since the
2007-09 recession, supported that expectation. Gross domestic
product fell at a 0.1 percent annual rate after growing at a 3.1
percent clip in the third quarter.
    "The key thing for investors is that liquidity remains in
place. The market, after it digests this information, is likely
to continue to buy the dips versus sell the rallies," said Dan
Veru, chief investment officer at Palisade Capital Management,
in Fort Lee, N.J.
    The euro was last at $1.3574, with spot gold prices
 up $18.41, or 1.11 percent, to $1,681.80. 
    Easy U.S. monetary policy adds to the attractiveness of the
euro. In recent years investors would buy the dollar as a safer
haven on bad economic data, but at least on Wednesday, they saw
the euro as a better bet. 
    The Dow Jones industrial average was down 29.49
points, or 0.21 percent, at 13,924.93. The Standard & Poor's 500
Index was down 3.96 points, or 0.26 percent, at 1,503.88.
The Nasdaq Composite Index was down 5.97 points, or 0.19
percent, at 3,147.69. 
    Brent crude oil reached its highest level in three and a
half months as it passed $115 a barrel. It last traded at
$114.90. U.S. light sweet crude oil rose 38 cents, or
0.39 percent, to $97.95 per barrel.
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