GLOBAL MARKETS-Stocks, euro rise after Fed move; bonds fall

Wed Dec 12, 2012 12:54pm EST

* Fed ramps up stimulus to support economic growth
    * Fed move boosts risk appetite
    * Treasury prices fall sharply after brief bounce

    By Wanfeng Zhou
    NEW YORK, Dec 12 (Reuters) - U.S. stocks rose and the euro
rallied against the dollar on Wednesday after the Federal
Reserve ramped up its monetary stimulus as contentious U.S.
budget talks heightened uncertainty about the economic outlook.
    Treasury prices briefly added to gains, before falling after
the U.S. central bank committed to monthly purchases of $45
billion in Treasuries on top of the $40 billion per month in
mortgage-backed bonds it started buying in September. 
    In a surprise move, the Fed also adopted numerical
thresholds for policy, a step that had not been expected until
early next year. 
   "The $45 billion number confirms what the market was looking
for. It's additional (quantitative easing), which should be
risk-positive," said Brad Bechtel, managing director at Faros
Trading in Stamford, Connecticut.
    "It underpins the equity market and, to me, is a nice
framework for a risk rally that I would expect to carry over
into the first quarter. The fiscal cliff is obviously a concern
but if we get through that, it should be risk-positive."
    The Dow Jones industrial average gained 40.81 points,
or 0.31 percent, to 13,289.25. The Standard & Poor's 500 Index
 rose 6.20 points, or 0.43 percent, to 1,434.04. The
Nasdaq Composite Index added 4.71 points, or 0.16
percent, to 3,027.01.     
    The MSCI global stock index advanced 0.5
percent to 338.61 points. 
    The euro rose 0.6 percent to $1.3075, after hitting a
session peak of $1.3079 after the Fed announcement. The dollar
rose 0.7 percent to 83.06 yen.
    The euro had jumped sharply minutes before the Fed
announcement after Silvio Berlusconi said he would withdraw as a
candidate in Italy's coming election if outgoing Prime Minister
Mario Monti ran as the head of a "moderate" coalition.
 
    The benchmark 10-year U.S. Treasury note was down 5/32 in
price, with the yield at 1.673 percent.
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