Asia stocks down as Fed action deemed too little

BANGKOK (AP) ? Asian stock markets were mostly lower Thursday as investors registered dismay at the path chosen by the Federal Reserve to try to invigorate the stalled U.S. recovery.

At the end of a two-day policy meeting Wednesday, the Fed said it was extending a program called Operation Twist, under which the Fed swaps short-term bonds for longer-term ones to help keep long-term interest rates low.

But analysts said the program's extension might not provide much benefit. Businesses and consumers who aren't borrowing now aren't that likely to change their minds just because rates dropped a little more.

Stan Shamu of IG Markets in Melbourne said in a market commentary that investors were "disappointed" that the Fed had not chosen to embark on a third major round of bond purchases, known as quantitative easing.

Such purchases would lower rates even further. The Fed has completed two such programs, buying more than $2 trillion in Treasury bonds and mortgage-backed securities, to help prop up the economy.

"Sentiment also dampened after the Fed cut estimates for economic growth on the back of a slowing jobs and tough credit markets," Shamu said.

Japan's Nikkei 225 index rose 1 percent to 8,836.69. Hong Kong's Hang Seng lost 0.6 percent to 19,389.07 and South Korea's Kospi lost 0.7 percent to 1,891.23. Australia's S&P/ASX 200 fell 0.6 percent at 4,106.90.

Oil prices retreated overnight, putting pressure on energy shares. South Korea's S-Oil Corp. fell 2.1 percent. China National Offshore Oil Corp. dropped 3.1 percent. Australia's Woodside Petroleum lost 2.3 percent.

U.S. stocks fell slightly on Wednesday after the Federal Reserve cut its estimate for economic growth for the year.

The Dow Jones industrial average fell 0.1 percent to close at 12,824.39. The Standard & Poor's 500 index fell 0.2 percent to 1,355.69. The Nasdaq composite rose marginally to 2,930.45.

Benchmark oil for August delivery was down 87 cents to $80.58 per barrel in electronic trading on the New York Mercantile Exchange. The contract dropped $2.23 to close at $81.80 per barrel in New York on Wednesday.

In currencies, the euro fell slightly to $1.2670 from $1.2672 late Wednesday in New York. The dollar rose to 79.57 yen from 79.47 yen.

Associated Press

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