Fed takes no new steps

The Federal Reserve yesterday pointed to turmoil in Europe as a big risk to the US economy, leaving the door open to a further easing of monetary policy even as it noted some improvement in the US labour market.

The central bank characterised the US economy as expanding moderately despite an apparent slowing in global growth. Though there had been "some" improvement in the jobs market, unemployment remained high and the bank held interest rates near zero.

"Strains in global financial markets continue to pose significant downside risks to the economic outlook," the Fed said.

Prices for US stocks and government debt pared gains, while the dollar rose against the euro.

The Dow Jones industrial average dropped 71.03 points, or 0.59%, to 11950.36. The S&P's 500 Index dropped 11.18 points, or 0.90%, to 1225.56. The Nasdaq Composite Index dropped 333.78 points, or 1.29%, to 2578.48.