Fed gives markets a late boost

NEW YORK, March 15 (UPI) -- U.S. markets pulled back from a sharp plunge Tuesday after the U.S. Federal Reserve said the U.S. economic recovery was gaining momentum.

The central bank said "the economic recovery is on a firmer footing and overall conditions in the labor market appear to be improving gradually."

The statement turned around a day of negative sentiment sparked by a huge sell-off in Tokyo that sent the Nikkei 225 index down 10.55 percent.

On Tuesday in Japan, the sell-off escalated as concern over a 9-magnitude earthquake turned to fears of a nuclear catastrophe because of power plant damages.

Stocks on Wall Street felt the economic aftershocks. With most factory work suspended in Japan and international trade at a standstill, foreign firms are not immune from troubles in the world's third-largest economy.

While heading higher after the Fed announcement, major indexes did not make it back to the break-even point. By close of trading in New York, the Dow Jones industrial average lost 137.74 points or 1.15 percent to 11,855.42. The Standard & Poor's 500 index dropped 14.52 or 1.12 percent to 1,281.87. The Nasdaq composite index lost 33.64 or 1.25 percent to 2,667.33.

On the New York Stock Exchange, 636 stocks advanced and 2,378 declined on a volume of 3.9 billion shares traded.

World stocks were already shaky due to government debt issues in Europe and civil unrest in Libya, which had sent oil prices sharply higher. Oil prices, however, tumbled Tuesday as demand from Japanese industries slackened sharply.

April delivery crude oil on the New York Mercantile Exchange shed $3.70 to $97.49 per barrel.

The 10-year treasury note rose 13/32 to yield 3.318 percent.

The dollar was mixed. The euro fell to $1.3995 from Monday's $1.3999. Against the yen, the dollar fell to 80.74 yen from Monday's 81.69 yen.

The Nikkei 225 closed at 8,605.15, off 1,015.34 points.

In London, the FTSE 100 index shed 1.38 percent, 79.96, to 5,695.28.