By Herbert Lash
NEW YORK (Reuters) - Global equity markets slid and the dollar strengthened on Wednesday after minutes from the latest Federal Reserve policy-setting meeting failed to suggest when its buying of bonds would slow, but also did not alter the eventuality of those plans.
U.S. equities dropped to session lows and the dollar strengthened further soon after the release of minutes from the Fed's policy-setting meeting in late July. But Wall Street later rebounded a bit when the minutes offered no new clues on when it would begin to trim its buying of $85 million a month in bonds.
The minutes showed differences among members of the Federal Open Market Committee as to when the Fed should start winding down its stimulus. However, the minutes did not materially change the market's expectation of a September tapering.
"The July FOMC minutes ... show a Fed that did not wish to alter the message it gave following the June FOMC meeting and the semi-annual statement and did not wish to alter market expectations," said Alan Ruskin, global head of foreign exchange strategy at Deutsche Bank in New York.
"That does not smack of a Fed going out of its way to fight the back-up in bond yields."
Stocks on Wall Street traded near break-even, with the Dow and the S&P 500 slightly lower.
In a thin market there is no reason for equities to sell off, and therefore they bounced back, said Rick Meckler, president of hedge fund LibertyView Capital Management LLC, Jersey City, New Jersey.
"Investors who had quickly pulled the trigger to sell upon seeing no follow-through, just bought back," Meckler said. "We know eventually they will taper, but there's no evidence it's happening any faster than the last time they spoke."
The Dow Jones industrial average <.DJI> fell 84.02 points or 0.56 percent, to 14,918.97, the S&P 500 <.SPX> lost 6.6 points or 0.4 percent, to 1,645.75 and the Nasdaq Composite <.IXIC> dropped 6.229 points or 0.17 percent, to 3,607.361.
MSCI's all-country stock index <.MIWD00000PUS> was down 0.53 percent at 368.25, while the pan-European FTSEurofirst 300 index <.FTEU3> of top regional shares closed down 0.6 percent at 1,207.71.
The dollar edged higher from a six-month low against the euro and gained versus the yen.
The euro was down 0.37 percent at $1.3367. The dollar index, which measures the greenback versus a basket of six currencies, rose 0.44 percent to 81.261 <.DXY>. Against the yen, the dollar rose 0.58 percent to 97.82.
U.S. Treasuries prices fell, as did German bond prices before the release of the Fed minutes.
The benchmark 10-year U.S. Treasury note was down 14/32 in price to yield 2.8695 percent.
German 10-year bond yields rose as high as 1.892 percent, just below levels on Monday that were the highest since March 2012, and last yielded about 1.87 percent.
German Bund futures settled 47 ticks lower at 140.14.
Before the minutes were released, a report showed U.S. home resales rose in July to the highest level in over three years, suggesting sharply rising borrowing costs are having only a limited impact on the housing market's recovery.
The National Association of Realtors said on Wednesday that existing home sales jumped 6.5 percent, well above analysts' expectations, to an annual rate of 5.39 million units.
Analysts said the August nonfarm payrolls data, due on September 6, will be closely watched by investors and policymakers to determine whether improvement in the U.S. labor market is enough to justify scaling back stimulus.
Half the economists polled by Reuters expect the Federal Open Market Committee to begin slowing its asset purchases from September.
Brent crude oil fell below $110 a barrel on reports some Libyan oil exports might soon resume and on news the Seaway crude oil pipeline had shut, halting shipments from the U.S. Midwest to the Gulf Coast.
Brent futures for October settled down 34 cents at $109.81 a barrel. U.S. October oil fell $1.26 to settle at $103.85 a barrel.
U.S. Treasury yields: http://link.reuters.com/gar98t
Indian Rupee and bonds: http://link.reuters.com/gaw89t
Reuters Insider on global markets: http://reut.rs/19Gblgp
(Additional reporting by Richard Hubbard in London; Editing by Bernadette Baum, Dan Grebler and Nick Zieminski)
