World stocks weak after central bank meetings

LONDON (Reuters) - World stocks were weaker on Thursday following the Federal Reserve's decision to keep interest rates near zero for "an extended period" and signals from others that the global economy is not yet out of the woods.

Wall Street looked set for tentative gains at the start.

The European Central Bank and Bank of England both kept rates steady, as expected, but the latter increased its program of asset purchases by 25 billion pounds.

That was at the bottom end of what analysts had been forecasting -- though in line with a Reuters' consensus -- and it pushed sterling higher and bonds lower in the UK and the euro zone.

The dollar was flat against a basket of major currencies, however, unable to keep up early gains that came after the previous session's post-Fed sell off.

Investors were also bracing for Friday's monthly U.S. jobs report, which often prompts volatility on financial markets.<ECI/US>

"Investors were pushing the market lower, preparing for more selling by investors such as hedge funds in case U.S. jobs data raises a disturbance," said Tsuyoshi Segawa, an equity strategist at Mizuho Securities.

Adecco, the world's largest staffing company, said a tentative pickup in demand for temporary workers and signs that companies are making fewer layoffs have boosted its confidence in the economic recovery.

MSCI's all-country world stock index .MIWD00000PUS was down 0.1 percent, well off its lows. The pan-European FTSEurofirst .FTEU3 slid 0.3 percent and Japan's Nikkei .N225 closed down 1.3 percent.

The Fed's closely watched policy statement late on Wednesday was somewhat more upbeat than its statement in September.

However, it was also more explicit about why it expects to keep rates low for some time yet, citing "low rates of resource utilization, subdued inflation trends, and stable inflation expectations," none of which point to a buoyant economy.

That took the edge off a Wall Street rally and the mood carried over into Asia and Europe, where investors were also jittery about the ECB and BoE.

DOLLAR GAINS

The dollar lost strength after the BoE and ECB announcements.

The dollar index .DXY, which tracks the dollar against a basket of currencies, was flat as was the euro at $1.4869.

Sterling jumped more than a full U.S. cent to $1.6620 after the BoE decision, hitting its highest in two weeks as well as a day high of 89.33 pence against the euro.

Euro zone government futures hit a session low, taking a cue from the sell-off in UK government debt.

Two-thirds of analysts had predicted the bank would expand its asset-buying scheme, but opinion had been split on whether the increase would be 25 billion or 50 billion pounds.

(Additional reporting by Jessica Mortimer; Editing by Ruth Pitchford)