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May 28, 2017

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World markets struggle as boost after Fed news fades

HONG KONG--World stock markets struggled Friday as the euphoria faded from the Fed's promises of prolonged low rates to boost growth.

Markets were subdued in lackluster trading, with Japanese and Australian benchmarks moving lower after big gains the previous day.

The fluctuations reflect investors' cautious mood heading into summer plus lingering concern over the possible widening of the turmoil in Iraq and uncertainty about the U.S. economy's resilience.

Markets got an earlier boost from Federal Reserve Chair Janet Yellen's pledge this week that short-term rates would not rise from record lows anytime soon.

"Both U.S. and Asian markets have been much more subdued after the FOMC (Federal Open Market Committee) meeting and it seems that once the dust settles the big moves in a number of assets were predominantly based on position re-adjustment than anything else," said Chris Weston of IG Markets in Melbourne.

In early European trading, France's CAC-40 edged up 0.1 percent to 4,568.23 while Germany's DAX added 0.3 percent to 10,034.56. The FTSE 100 index of leading British companies gained 0.3 percent to 6,829.91.

U.S. stocks were poised for a flat opening, with Dow futures up 0.1 percent to 16,843.00 and broader S&P 500 futures up 0.1 percent to 1,951.40.

Asian shares were mixed Friday, following another record close on Wall Street, while the dollar faced some downward pressure after the U.S. Federal Reserve indicated interest rates would stay ultra low into next year.

Seoul shed 1.20 percent, or 23.96 points, to 1,968.07, Sydney fell 0.89 percent, or 48.7 points, to 5,419.5 while Tokyo finished flat, slipping 11.74 points to 15,349.42.

Shanghai closed 0.15 percent higher, adding 2.94 points, to 2,026.67 and Hong Kong gained 0.11 percent, or 26.33 points to 23,194.06.

In New York, the S&P 500 ended at an all-time high for the second straight session, helped by figures showing new claims for unemployment insurance benefits fell last week, pointing to a general downtrend in job losses.

The broad-based S&P 500 rose 0.13 percent, while the Dow edged up 0.09 percent although the Nasdaq dipped 0.08 percent.

Gold prices rally

Japan's Nikkei index led the way in Asia despite the dollar sinking further against the yen. Japanese exporters are usually hit by a stronger yen as it hurts their competitiveness overseas.

In afternoon trade the dollar was at 101.90 yen compared with 101.94 yen in New York Thursday afternoon.

The euro fetched US$1.3612 and 138.74 yen against US$1.3606 and 138.70 yen in U.S. trade.

Gold rallied in U.S. trade as the prospect of low U.S. interest rates meant there was more chance of inflation rising. The precious metal is considered a haven against rising prices while it also weakens when interest rates go up as dealers look for better returns.

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