US stocks plunged but rallied to close in positive
The US Federal Reserve says it will keep its benchmark interest rate at near zero at least through mid-2013 in a move that disappointed markets hoping for more direct action to aid the flagging US economy.
US stocks plunged after the statement was released on Tuesday, but rallied to close in positive.
The Dow Jones industrial average was up 429.69 points, or 3.98 per cent, at 11,239.54, based on the latest figures. The Standard & Poor's 500 Index was up 53.11 points, or 4.75 per cent, at 1,172.57.
The Nasdaq Composite Index was up 124.83 points, or 5.29 per cent, at 2,482.52.
The Fed said it would keep its existing monetary stimulus on track and offered a long two-year timeframe for rates to stay low. But it offered no new monetary initiatives.
Earlier, stock exchanges in Europe recovered from heavy losses made in the morning trade as markets across the world witnessed volatility.
Worst hit were stock markets in the Middle East. Most Asian markets ended down, but China and Australia's markets ended a little up.
Europe's main stock markets ended days of sharp declines with London's FTSE-100 index up 1.89 per cent to 5,164.92 points, and in Paris the CAC-40 gained 1.63 per cent to 3,176.19 points.
The Asian slide followed a drop of more than six per cent on Wall Street on Monday in the first trading session since the downgrade of the United States' AAA credit rating by Standard & Poor's.
Tokyo recovered ground to close down 1.68 per cent but Hong Kong's Hang Seng finished the session down 5.66 per cent and Seoul lost lost 3.63 per cent.
Gold hit a record high on Tuesday in its biggest three-day rally since the depths of the financial crisis in 2008, as investor fears over the threat to the global economy from the European and US debt crises hit assets seen as higher risk.
Though spot prices retreated from highs as stock markets opened higher in the United States, they remained up 1.4 per cent on the day at $1,739.60 an ounce at 1342GMT, having earlier peaked at $1,778.29.
