Wall Street rally fades as Fed offers no surprises

       Wall Street saw a rally fizzle Wednesday in a muted reaction to a Federal Reserve decision to maintain its present course of stimulating the economy with low rates and extra liquidity.
       The Dow Jones industrial average, up more than 150 points after the Fed described the US economy as showing more signs of recover y, closed up 30. The broader indexes were narrowly mixed.
       Analysts couldnt point to any one reason why stocks gave up their gains, although some said the market is increasingly nervous as the release of the governments October jobs report today approaches. Financial stocks fell especially hard in the last hour of trading after a House vote to speed up the effective date of limits on credit card companies, and added to the overall markets pullback.
       The Fed, as expected, left its benchmark interest rate unchanged at a record low of essentially zero and said the economy is slowly rebounding. Its announcement followed reports on service industries and employment that eased two of the biggest worries about the economy.
       The Feds statement accompanying its rate decision noted that housing activity has picked up in recent months. It also said consumer spending, while still constrained by unemployment and other problems,appears to be growing.
       Policymakers said they would keep interest rates low for anextended period and said inflation is likely to remain tame. That eased some worries that rising prices would force the Fed to boost interest rates and risk cutting off a nascent recovery in the economy.
       But, as often happens after Fed meetings, stocks were unable to hold their gains. The Fed statement,while more upbeat than in recent months, did note that there are ongoing job losses. And investors were well aware that the Labour Departments October jobs report is just two days away.
       Meanwhile, the House approved new rules for credit card companies unless lenders agree to freeze interest rates and fees. The vote would move up the February effective date of legislation already passed by Congress that limits what banks can charge for credit cards.
       It didnt appear likely that the Senate would also pass the measure, but the House vote still sent financial stocks falling. And when bank stocks fall, the rest of the market tends to follow.
       The Dow rose 30.23, or 0.3%, to 9,802.14. It had been up as much as 156 after the Fed announcement.
       The broader Standard & Poors 500 index rose 1.09,or 0.1%, to 1,046.50, and the Nasdaq composite index fell 1.80, or 0.1%, to 2,055.52.
       Winning stocks were ahead of losers by 8 to 7 on the New York Stock Exchange, where volume came to 1.35 billion shares. The Fed appeared more upbeat than investors by the end of trading Wednesday.Its definitely dovish. We think it supports continued market progress over the next few months,said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland.
       But investors have grown fearful that the economic rebound theyve been betting on over the past eight months will be fleeting, consider ing that job losses remain high and consumers still arent spending freely.Stocks have zigzagged over the past few weeks amid the heightened uncertainty.
       The days economic reports bolstered hopes that consumers could increase consumer spending, a critical factor for an economic recovery.
       The Institute for Supply Management said service industry activity grew for a second straight month in October. The trade groups service index slipped to 50.6 from 50.9 in September. A reading above 50 signals growth.
       The index didnt meet forecasts but the ISM said new orders, which are an indicator of future business activity, grew faster. Business activity also picked up.
       Encouraging news about the labor market also boosted investors mood. The ADP National Employment Report said 203,000 private sector jobs were lost in October, down from the 227,000 lost in September. It was the seventh straight month of declining job losses. That stirred hopes for a better-than-expected employment report from the Labour Department today.
       The dollar fell against other major currencies, helping to send commodities prices higher.
       Gold rose as high as $1,096.50 an ounce. Crude oil added 80 cents to $80.40 a barrel on the New York Mercantile Exchange as the government said US crude supplies fell more than expected. AP
       LONDON 5,107.89 +70.68
       Britains leading shares ended 1.4% higher on Wednesday boosted by a rebound from miners and banks, with retailers Next and Marks & Spencer also higher after posting forecast-beating figures.
       At the close, the FTSE 100 was up 70.68 points at 5,107.89, recouping all of Tuesdays losses when the index fell 1.3% to its lowest closing level in a month.
       In Frankfurt, the DAX index ended at 5,444.23 points,up 90.88 or 1.70%. In Paris, the CAC-40 index closed at 3,670.33 points, up 86.08 or 2.40%.Tuesdays fall looked to have been overdone, and shares have bounced back but confidence remains fragile ahead of lastnights news from the Fed and the BoEs pronouncements yesterday, said Mic Mills, senior trader at ETX Capital.
       A rebound by mining stocks added the most weight to the blue chip rally, reflecting a rise in metal prices on the back of a weaker dollar ahead of the Federal Reserves statement on interest rates and the economy,due at 1915 GMT.
       Fresnillo, Kazakhmys, Antofagasta, Xstrata, BHP Billiton and Vedanta Resources were up 3.3 to 9.2%.
       Banks recovered from Tuesdays sharp falls as investors re -evaluated the outlook for the sector following the ฃ31 billion($51.06 billion) in funding from the government agreed for Lloyds Banking Group and Royal Bank of Scotland
       RBS added 1.5%, while Barclays, HSBC and Standard Chartered gained 1.4 to 4.2%. But Lloyds shed 1.2% as its record ฃ13.5 billion rights issue weighed on it.Wall Street posted strong gains in early trade on Tuesday, with US blue chips up 1.2% by Londons close awaiting the Fed statement, and after the US Institute of Supply Management said activity in the ser vice sector grew for a second consecutive month.
       The Fed is seen affirming its stance that policies to support the economy will stay in place for some time while keeping interest rates near zero.
       Yesterday, the BoE is forecast to raise its quantitative easing policy and keep interest rates unchanged.
       The British ser vices sector showed its strongest activity since the start of the credit crunch in October 2008, the CIPS/Markit services PMI data showed.
       British consumer morale hit its highest levels in the last two months since April 2008, according to the Nationwide Consumer Confidence Index.
       Next was a top blue chip gainer, adding 5.6% after the high street retailer reported better-than-expected third-quarter sales and upgraded its sales and profit guidance for the balance of the year.
       Retail rival Marks & Spencer put on 6%, as it posted flat first-half profits, near the top end of forecasts as tight management of costs and stocks offset weak sales.
       Among other blue chip gainers, Aviva led life insurers higher, adding 5.5%, with the firm shrugging aside results that were slightly below forecasts as investors reacted positively to its solvency position.
       Travel firm Thomas Cook jumped 7.4%, lifted by an upgrade from Collins Stewart tobuy, with peer TUI Travel gaining 5.5%.
       British Airways took on 6.6% as UBS upped its rating tobuy fromneutral ahead of the airlines second-quarter results, due today.