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The dollar surged to a three-week high, bond yields rose and gold fell on Thursday after the US Federal Reserve ended its six-year quantitative easing bond-buying programme.

The decision was widely expected, but a relatively hawkish tone to the accompanying statement was not. It prompted financial markets to rethink the growing consensus that the Fed’s first interest rate hike would be late in 2015.

Stock market reaction was more mixed. Asian shares mostly fell, following a slight decline on Wall Street overnight. European bourses opened higher on Thursday, helped by encouraging corporate earnings, but quickly turned negative.

In a statement on Wednesday after a two-day meeting, the Fed retained its basic guidance that overnight borrowing costs would remain near zero for a “considerable time”.

But it dropped a characterisation of the US labour market slack as “significant” in a show of confidence in the economy’s prospects, which markets perceived as a slightly hawkish turn.

In early European trade the dollar index, a broad measure of the greenback’s trade-weighted value, was up 0.5 percent above 86.4.

European equity markets initially welcomed the Fed’s statement as a sign that the US economy is in good shape, rather than taking fright at the prospect of interest rates perhaps rising sooner than had been expected.

But at 0930 GMT the EuroFirst 300 index of leading shares was down 0.1 per cent at 1317 points. Germany’s DAX was down 0.4 per cent and France’s CAC40 was down 0.1 per cent, shrugging off upbeat corporate updates from Alcatel Lucent, Technip and Renault.

Britain’s FTSE 100 was down 0.5 per cent, and U. futures pointed to Wall Street opening around 0.2 per cent lower.

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