Volkswacht Bodensee - Markets stabilize as investors digest latest Fed minutes

The minutes from the Fed's February 1 meeting showed nearly all policy makers favored a smaller interest rate hike.

But since then, January inflation and employment data have suggested that pricing pressures remain acute, stoking fears that the US central bank's rate-hiking cycle could be prolonged.

Still, US markets avoided another day of dramatic losses, with the Dow and S&P 500 ending with modest losses and the Nasdaq finishing slightly higher after a choppy day.

That came on the heels of a mixed session on European trading floors and losses on leading Asian bourses.

Stocks fell on Tuesday and in Asian trading on Wednesday as strong economic data fanned expectations that US borrowing costs will continue to rise and stay high for some time.

"The higher (US) interest rates stay, the less relative appeal stocks have -- particularly as we are about to hit some serious earnings headwinds," Neil Wilson, analyst at trading firm Finalto, told AFP.

Briefing.com analyst Patrick O'Hare noted that the Fed meeting was held before the latest inflation and employment data, which showed inflation only slowly coming down and the labor market to be robust.

"Accordingly, the market should be more sensitive to views in the minutes that emphasize a need to take rates higher, and leave them at higher levels for longer, than it is to views with a softer-sounding approach," said O'Hare.

The recent data has essentially put to bed any talk of the Fed pausing its rate hikes and even cutting rates by the end of the year.

"A tight labor market and resilient consumer demand could goad the Federal Reserve to maintain its rate hiking campaign into the summertime," said Jeffrey Roach, chief economist for LPL Financial.

"Investors should expect volatility until markets and central bankers come to agreement on the expected path for interest rates."

Elsewhere, oil prices fell on renewed recession risks.

"Crude oil prices look set to fall for the second day in a row over concerns that sharply higher rates could prompt a slowdown in demand," said Michael Hewson at CMC Markets.

- Key figures around 2150 GMT -

New York - Dow: DOWN 0.3 percent at 33,045.09 (close)

New York - S&P 500: DOWN 0.2 percent at 3,991.05 (close)

New York - Nasdaq: UP 0.1 percent at 11,507.07 (close)

London - FTSE 100: DOWN 0.6 percent at 7,930.63 (close)

Frankfurt - DAX: FLAT at 15,399.89 (close)

Paris - CAC 40: DOWN 0.1 percent at 7,299.26 (close)

EURO STOXX 50: DOWN 0.2 percent at 4,242.88 (close)

Tokyo - Nikkei 225: DOWN 1.3 percent at 27,104.32 (close)

Hong Kong - Hang Seng Index: DOWN 0.5 percent at 20,423.84 (close)

Shanghai - Composite: DOWN 0.5 percent at 3,291.15 (close)

Euro/dollar: DOWN at $1.0609 from $1.0648 on Tuesday

Pound/dollar: DOWN at $1.2046 from $1.2112

Euro/pound: UP at 87.99 pence from 87.91 pence

Dollar/yen: DOWN at 134.71 yen from 135.01 yen

West Texas Intermediate: DOWN 3.2 percent at $73.95 per barrel

Brent North Sea crude: DOWN 3.0 percent at $80.60 per barrel

burs-jmb/bgs

O.Krause--BTB