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Stocks battered Fed's wait-and-see stance
Stocks hit by Fed's wait-and-see stance on another stimulus in run-up to ECB rate verdict
By The Associated Press

LONDON (AP) ' Stocks around the world took a pounding Wednesday as investors pared back any remaining expectations that the Federal Reserve would be pumping more money into the U.S. economy.

Though minutes to the last rate-setting meeting showed Fed policymakers voiced some concerns over U.S. economic growth and the pace of hiring, they showed no sign that they were ready to pump more money into the world's largest economy.

Figures Wednesday from the ADP payrolls firm showing that private employers in the U.S. added 209,000 jobs during March further damped expectations of further Fed action soon. The ADP figures are closely watched as they foreshadow Friday's official government nonfarm payrolls data, which often set the market tone for a week or two after their release.

The European Central Bank's president Mario Draghi also failed to provide any indication that it too was considering further easing measures after keeping its main interest rate unchanged at the record low of 1 percent.

One of the reasons why markets have rallied from the lows they hit around three years ago was that central banks around the world, notably the Fed, have provided big injections of money into the financial system. There have been some hopes recently that the Fed would authorize another bond-buying program, known as quantitative easing ' much of the money that's been pumped in over the past few years has ended up in financial markets, notably boosting stocks and commodities.

"The market still seems somewhat addicted to central bank assistance which makes me think that this crisis still has a long way to go," said Gary Jenkins, managing director of Swordfish Research.

In Europe, the FTSE 100 index of leading British shares was down 1.3 percent at 5,760 while Germany's DAX fell 2 percent to 6,844. The CAC-40 in France was 1.9 percent lower at 3,343.

In the U.S., the Dow Jones industrial average was down 0.8 percent at 13,094 while the broader S&P 500 index fell 0.8 percent to 1,403.

Despite Wednesday's declines, stock markets are trading at fairly high levels ' the Dow, for example, is not far off its highest level since the end of 2007 while Europe's main indexes remain near eight-month highs.

Another source of tension in the markets is Spain, which failed to raise as much money as hoped in a set of bond auctions on Wednesday. Spain has become the latest point of concern in Europe's debt crisis, now that Greece has got its second bailout and tensions in Italy appear to have eased as new premier Mario Monti pushes through his wide-ranging austerity and reform measures.

On Tuesday, the Spanish government warned that its debt burden would rise to nearly 80 percent of national income even after big cuts in spending and tax increases this year. With unemployment standing at a eurozone high of around 23 percent, investors are worried about whether the country can deal with its debts to avoid the bailout fate of Greece, Ireland and Portugal.

In the currency markets, those worries weighed on the euro, which was down 0.7 percent at $1.3138.

Earlier in Asia, stocks also faltered. Japan's Nikkei 225 index plunged 2.3 percent to 9,819.99, its lowest close in nearly a month while South Korea's Kospi tumbled 1.5 percent. Markets in mainland China, Hong Kong and Taiwan were closed for public holidays.

Oil prices tracked equities lower, with the benchmark New York rate down $1.33 at $102.68 a barrel.


Pamela Sampson in Bangkok contributed to this report.

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