(Updates after Wall Street close, adds graphic links))
* U.S. Fed's growth warning hits European, U.S. stocks
* Gains in emerging market currencies, stocks fizzle
* Bond yields slip on delay in U.S. rate hike to 2016
* Oil prices tumble, gold approaches near 3-week peak
By David Gaffen and Richard Leong
NEW YORK, Sept 18 (Reuters) - Stocks on major markets
slipped on Friday and bond prices rose, pushing yields sharply
lower, after the U.S. Federal Reserve on Thursday clung to its
near-zero interest rate policy with global economic growth
slowing.
Stocks and currencies in emerging markets, which are more
vulnerable to higher U.S. interest rates, briefly welcomed the
Fed's decision to postpone an interest rate rise, but their
bounce faded with the persistent sell-off in developed markets.
Short-term lending rates, used as proxies for market
expectations for the Fed's next move, shifted dramatically.
December's fed funds futures contract rose to drop its rate to
21.5 basis points, implying only about a 44 percent chance of a
rate increase by the end of the year. ID:nL1N11O0LC
"Investors are wrestling with how concerned they should be
regarding global growth," said Jeremy Zirin, chief equity
strategist at UBS Wealth Management in New York.
"The Fed has introduced a quasi-third mandate on global
growth, apart from the labor market and inflation."
U.S. debt yields remained under downward pressure, with the
U.S. Treasury two-year note's yield at 0.678 percent, a day
after it hit a four-and-a-half-year high of 0.819 percent.
U.S. stock prices weakened, following other developed
markets. The Dow Jones industrial average .DJI ended down 1.74
percent at 16,384.79, while the S&P 500 .SPX finished down
1.61 percent at 1,958.08 and the Nasdaq Composite .IXIC closed
1.36 percent lower at 4,827.23. .N
The FTSEuroFirst index of the top 300 European shares closed
1.9 percent lower at 1,397.57 points .FTEU3 , its biggest fall
in two weeks. .EU
Japan's Nikkei average .N225 fell 2.0 percent. .T
European government bond yields tumbled, tracking the 2-year
U.S. Treasury yield's biggest fall since 2010. The 10-year
German Bund yield was down 12 basis points EU10YT=RR to 66
basis points for its biggest one-day fall since early July.
YEAR-END U.S. INTEREST RATE RISE?
A growing number of economists are now wondering whether the
Fed will raise interest rates at all this year. A Reuters poll
of the primary dealers in Treasury securities showed 12 of 17
now see the first rate increase in December. ID:nL1N11M2V0
Fed Chair Janet Yellen said the global economic outlook
appeared less certain, adding that recent falls in U.S. stock
prices and a rise in the value of the U.S. dollar were already
tightening U.S. financial market conditions. ID:nL1N11N244
Emerging market equities touched a one-month high before
erasing their gains in late trading. MSCI's broadest emerging
market index .MSCIEF was down 0.1 percent, shaving its weekly
gain to 3.0 percent which was still its biggest weekly increase
since early April.
The U.S. dollar recovered much of Thursday's loss following
the Fed's decision. The dollar index against a basket of major
currencies .DXY was up 0.7 percent at 95.239. FRX/
The euro EUR= gave up earlier gains, falling from a
three-week high of $1.1459 earlier to $1.1298, down 1.2 percent.
The dollar was little changed against the yen to 119.94 yen
JPY= .
U.S. crude oil utures CLc1 settled down 4.7 percent at
$44.68 per barrel. Brent crude fell 3.3 percent to $47.47 a
barrel LCOc1 .
Gold rose to a near three-week high. Spot gold XAU= rose
$7.16 or 0.63 percent, to $1,138.36 an ounce, after earlier
hitting $1,141.30. GOL/
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FOMC meeting graphic http://reut.rs/1UYILhp
World interest rates http://link.reuters.com/xyb96s
Global assets in 2015 http://link.reuters.com/dub25t
Currencies vs dollar http://link.reuters.com/tak27s
Commodities performance http://link.reuters.com/rac73w
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