Global shares fall on Fed rate hike, UK rate outlook


NEW YORK, June 15 World stock indexes fell on Thursday as technology shares extended their recent selloff, while the prospect of tighter monetary policy in the United States and Britain pushed up the dollar. The U.S. dollar bounced back from seven-month low against a basket of currencies after the Federal Reserve raised interest rates and gave a first clear outline on its plan to reduce its $4.2-trillion portfolio of bonds.

HONG KONG: The Hong Kong Monetary Authority raised interest rates after the Fed's move, to help keep the territory's currency at a stable rate against the US dollar. The Federal Reserve has raised its key interest rate for the third time in six months, providing its latest vote of confidence in a slow-growing but durable economy. Sterling weakened 0.3 percent to $1.2717 before a Bank of England policy decision expected to leave interest rates at record lows.

Laugh if you will but the Federal Reserve is as committed to the Phillips Curve as ever.

The US jobless rate fell to a 16-year low last month.

Investors' appetite for riskier assets was also dampened by soft USA data and after the Federal Reserve raised interest rates as expected and gave its first clear outline on its plan to reduce its $4.2-trillion bond portfolio. The pan-European STOXX 600 index dropped 0.5 percent, led lower by the basic resources and oil and gas sectors, as the stronger dollar weighed on metals prices. US shares looked set to open lower, with Dow futures down 0.4 percent and S&P futures off 0.6 percent.

In currency markets, the dollar was up 0.2 percent against a basket of major peers, having earlier traded in negative territory as investors wondered whether the Fed would be able to raise rates again this year.

The Bank of England chose to leave the record low interest rate unchanged, in a split vote, as more policymakers sought a rate hike.

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GREECE DEBT: Attention in Europe will also turn to talks to get Greece the next batch of its rescue loans in time for it to avoid default in July.

GREECE DEBT: Athens hopes to secure more bailout funds to meet a summer debt repayment hump and to force a debt relief deal at a meeting Thursday of finance ministers from the 19-country eurozone.

Asia-Pacific stocks traded lower as investors took profits in the wake of the USA rate decision, with the Nikkei 225 trading down 0.26 percent and the Hang Seng down 1.20 percent (0952GMT).

Germany's 10-year government bond yield, the benchmark for the region, rose 1 basis point to 0.24 percent, off a seven-week low hit on Wednesday at 0.225 percent. The S&P ASX 200 in Australia tumbled 1.2 percent to 5,761.00.

Lower-rated Italian and Spanish government bond yields - which tend to be most sensitive to any changes or tweaks on monetary policy - were up 6-8 basis points.

ENERGY: Oil futures had plunged overnight after the USA government said oil supplies shrank only slightly last week while gasoline stockpiles grew. Benchmark U.S. crude fell another 22 cents to $44.51 a barrel in electronic trading on the New York Mercantile Exchange.

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