November 20, 2013 / 8:06 PM / 4 years ago

GLOBAL MARKETS-Shares pare gains after Fed; euro falls on ECB report

* Stocks pare gains on speculation Fed tapering could start
in March
    * Euro falls after report of possible ECB deposit rate
change
    * Gold prices fall on Fed, Brent rises


    By Ryan Vlastelica and Herbert Lash
    NEW YORK, Nov 20 (Reuters) - U.S. stocks retreated and gold
prices fell on Wednesday while U.S. Treasury yields shot higher
after minutes from a Federal Reserve policy meeting in October
suggested the U.S. central bank could begin to scale back its
bond buying in March.
    Most stocks on Wall Street pared gains to turn lower, with
the Nasdaq hovering above break-even. Spot gold prices 
fell 2.4 percent to $1,242.50 an ounce.
    Officials felt they could decide to start scaling back the
Fed's massive $85-billion-a-month asset-purchase program at one
of the bank's next meetings, provided this was warranted by
economic growth, the Fed minutes showed. 
    Policymakers are next scheduled to gather on Dec. 17-18.
    "We take these minutes as meaning March is the most likely
scenario for tapering. There's no overwhelming case to be made
for them to act in December," said Michael Woolfolk, senior
currency strategist at BNY Mellon in New York.
    Woolfolk said he was surprised by the relatively little
attention given to the impact of the 16-day government shutdown
in October. 
    "Maybe it really was a non-event, judging by today's retail
sales data and the October nonfarm payrolls," he said.
    Comments from a senior Fed official that a solid U.S. jobs
report for November would increase the likelihood of a reduction
in bond purchases beginning as early as December gave a further
boost to bond yields.
    The Dow Jones industrial average fell 54.88 points,
or 0.34 percent, to 15,912.15, the S&P 500 lost 5.1
points, or 0.29 percent, to 1,782.77 and the Nasdaq Composite
 dropped 5.999 points, or 0.15 percent, to 3,925.555.
    The euro fell sharply on a report saying the European
Central Bank was considering a negative deposit rate.
    Bloomberg reported that if the ECB were to take the deposit
rate for cash it holds overnight for banks into negative
territory, it would consider -0.1 percent. The current rate is
zero. An ECB spokesperson declined to comment. 
    The euro fell to a low of $1.3430, and last traded
down 0.74 percent at $1.3426. The U.S. dollar index rose
0.49 percent to 81.099. 
    The Fed's program and similar programs from other major
central banks have fueled equity gains in 2013, taking Wall
Street to repeated all-time highs and other regions around the
world to multi-year highs.
    The FTSEurofirst 300 ended up 0.12 percent at
1,297.38. 
    While the Fed's accommodative monetary policy is expected to
provide a floor under equities for as long as it continues,
questions about when it will start to be slowed have tempered
buying enthusiasm. In addition, the size of the rally has market
participants seeking new catalysts in an environment marked by
signs of tepid economic growth. 
    The MSCI world share index fell 0.5 percent.
    U.S. equities earlier were boosted by data showing consumer
spending rose more than expected in October, while consumer
prices unexpectedly fell. 
    Among other asset classes, Brent crude oil futures 
rose $1.14 to settle at $108.06 a barrel. U.S. crude fell
1 cent to settle at $93.33.
    The benchmark 10-year U.S. Treasury note fell 
19/32 in price to yield 2.7806 percent.

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