(Updates prices, changes lead, headline, updates bullets)
* Treasury yields rise further on possible December Fed
"liftoff"
* U.S. GDP softer than expected
* Wall Street edges lower
By David Gaffen
NEW YORK, Oct 29 (Reuters) - Stock markets around the world
fell and bond yields rose as investors weighed the implications
that a U.S. interest rate rise before the end of the year would
have for the global economy and markets.
The Federal Reserve, which kept its rates on hold as
expected on Wednesday, took the unusual step of strengthening
its language about timing in its statement, making it clear that
a December rate hike was still possible. The Fed also removed a
previous warning about slowing global growth. urn:newsml:reuters.com:*:nL1N12R2IF
Wall Street was lower, giving up some of Wednesday's gains.
The U.S. stock market initially reacted negatively to the Fed
statement, but later reversed course to end near the day's highs
on Wednesday.
The MSCI All-Country World Index .MIWD00000PUS has
recovered most of the losses that occurred beginning in
mid-August on worries about slowed worldwide demand and the
Fed's plans. It was last down 0.6 percent on Thursday.
U.S. Treasury yields continued Wednesday's rise after the
Fed explicitly referred in its statement at the end of its
two-day policy meeting to conditions necessary "to raise the
target range at its next meeting". Reference to a particular
meeting is rare for the Fed. urn:newsml:reuters.com:*:nW1N12F00G
The benchmark 10-year Treasury yield rose 7 basis points to
2.16 percent US10YT=RR . The two-year note's yield was 0.73
percent, highest since late September.
The Dow Jones industrial average .DJI fell 32.98 points,
or 0.19 percent, to 17,746.54, the S&P 500 .SPX lost 1.42
points, or 0.07 percent, to 2,088.93 and the Nasdaq Composite
.IXIC dropped 12.32 points, or 0.24 percent, to 5,083.38.
The first estimate of third quarter U.S. growth, released on
Thursday, showed the world's biggest economy expanded at a 1.5
percent annualized pace, below the expected 1.6 percent. But
economists expect growth to pick up in the fourth quarter, given
strong consumer spending figures. urn:newsml:reuters.com:*:nLNNTLEBHB
In Europe the pan-European FTSEurofirst 300 index .FTEU3
was down 0.2 percent at 1,481 points. Earlier in Asia, Japan's
Nikkei share average .N225 gained 0.2 percent to close at
18,935.71.
Many investors are still not convinced about a rate
lift-off given a recent run of soft U.S. data, making economic
releases in coming weeks more crucial in determining a December
move.
Economists expect a key U.S. manufacturing index due Monday
USPMI=ECI to show the first contraction in the sector in 2-1/2
years, which would not be conducive for a rate hike.
The Fed's stance contrasts to the European Central Bank and
other major central banks, a factor that is expected to underpin
the dollar. The Fed and ECB hold policy decisions within two
weeks of each other in December.
The ECB last week signalled its readiness to inject more
stimulus to boost prices and the People's Bank of China followed
with its sixth interest rate cut in less than a year.
urn:newsml:reuters.com:*:nL8N12M20T urn:newsml:reuters.com:*:nL3N12N405
The dollar gave back its earlier gains, with the euro
trading 0.4 percent higher on the day at $1.0966 EUR= , having
skidded to a 2-1/2 month low of $1.0826 overnight.
Crude oil futures were slightly higher one day after soaring
more than 6 percent as the U.S. government reported an inventory
build. urn:newsml:reuters.com:*:nL3N12T1FV
U.S. crude CLc1 rose 0.4 percent to $46.11 a barrel. Brent
LCOc1 was steady at $49.05. Spot gold XAU= fell 2 percent to
$1,150 an ounce.