World Markets Down on Fed Forecast Cut

SEOUL, South Korea (AP) --- Chinese stocks tumbled while other global stock markets were also lower Thursday after the Federal Reserve cuts its forecast for U.S. economic growth, a move that could delay Fed rate hikes but also suggests reduced American demand for Asia's exports.

KEEPING SCORE: Britain's FTSE 100 dipped 0.4 percent to 6,657.67 and Germany's DAX dropped 0.8 percent to 10,885.29. France's CAC 40 declined 0.8 percent to 4,752.87. Futures augured a tepid start for Wall Street. S&P 500 futures and Dow futures were both down 0.1 percent.

THE FED: The Federal Reserve left interest rates unchanged as expected and said in a statement after its latest policy meeting that it wants to see further economic gains and higher inflation before raising interest rates from record lows. The policymakers, while noting a strengthening U.S. economy, sharply lowered their estimate of growth this year, from a range of 2.3 percent to 2.7 percent estimated in March to a range of 1.8 percent to 2 percent. The downgrade reflects the economy's contraction in the January-march quarter, which resulted in part from a brutal winter.

ASIA'S DAY: Shanghai Composite index plunged 3.7 percent to 4,785.36 on worries about tighter margin lending and liquidity. Tokyo's Nikkei 225 fell 1.1 percent to 19,990.82 and Hong Kong's Hang Seng was down 0.2 percent to 26,694.66. Australia's S&P/ASX 200 fell 1.3 percent to 5,524.90. South Korea's Kospi outperformed the region, rising 0.3 percent to 2,041.88.

ANALYST'S TAKE: "While the decision not to raise interest rates this time was as expected, the decision to cut its GDP forecast for the second time in a row suggested to the markets that U.S. economic growth is still less than expected," Nicholas Teo, an analyst at CMC Markets, said in a commentary. "This cut in the GDP forecast pretty much rules out an interest rate hike in July and makes September unlikely unless the economy turns around in a big way soon."

GREEK DRAMA: Lack of progress in talks between Greece and its international creditors is also on the minds of investors. Greece and its creditors publicly blamed one another for an impasse in bailout talks Wednesday, on the eve of a eurozone finance ministers' meeting billed as key to their outcome. Greece needs to get more loans from its creditors before June 30, when its bailout program expires and it is scheduled to make a 1.6 billion euro ($1.8 billion) debt repayment to the International Monetary Fund. A default could result in Greece leaving the euro currency bloc, dealing a blow to the Europe's grand integration project.

ENERGY: Benchmark U.S. crude added 59 cents to $60.51 per barrel in electronic trading on the New York Mercantile Exchange. The contract closed up 5 cents at $59.92 per barrel in New York on Wednesday. Brent crude, a benchmark for international oil, rose 88 cents to $64.75 in London.

CURRENCIES: The dollar weakened to 122.80 yen from 123.58 yen on Wednesday. The euro strengthened slightly to $1.1385 from $1.1354.

(KA)