Sawt Falasteen - Wall Street stocks rebound despite government shutdown threat

The sharp losses in New York after Federal Reserve signalled Wednesday fewer cuts to US interest rates next year dragged down equities in Asia and Europe.

The dollar initially rallied on the outlook, with the yen under pressure Thursday also after the Bank of Japan kept borrowing costs unchanged, but it later gave up those gains against the euro and pound.

The Bank of England held its key interest rate steady due to UK inflation rising again, and it did not commit to when or by how much it will cut rates in 2025.

While that decision was widely expected, more BoE policymakers voted for a cut, which sent the pound trimming its gains against the dollar and falling against the euro.

The split suggests "members may be more nervous about the state of the economy than originally thought", said Daniela Sabin Hathorn, senior market analyst at Capital.com.

Wall Street's main indices rose at the start of trading on Thursday, with the Dow climbing 0.7 percent.

"It is a textbook reaction to a large selloff, but like yesterday, how the market opens isn't as important as how it finishes," said Briefing.com analyst Patrick O'Hare.

All three main indices in New York were sent spinning lower on Wednesday -- led by a rout of high-flying tech titans.

"In brief, the stark reality hit that the policy rate won't be coming down as much as previously hoped (key word) and that interest rates are apt to remain higher for longer as policy makers contemplate a future that could involve sticky inflation due to ongoing growth, the wealth effect, possible trade wars, and the deportation of illegal immigrants," said O'Hare.

Investors appeared unfazed for the moment at the possibility of a US government shutdown.

US President-elect Donald Trump and tech billionaire Elon Musk urged Republican lawmakers on Wednesday to scupper a cross-party deal to avert a halt in non-essential government operations in the early hours of Saturday.

- Key figures around 1430 GMT -

New York - Dow: UP 0.7 percent at 42,614.03 points

New York - S&P 500: UP 0.7 percent at 5,915.37

New York - Nasdaq Composite: UP 0.9 percent at 19,569.95

London - FTSE 100: DOWN 1.1 percent at 8,110.55

Paris - CAC 40: DOWN 1.1 percent at 7,302.13

Frankfurt - DAX: DOWN 1.0 percent at 20,031.45

Tokyo - Nikkei 225: DOWN 0.7 percent at 38,813.58 (close)

Hong Kong - Hang Seng Index: DOWN 0.6 percent at 19,752.51 (close)

Shanghai - Composite: DOWN 0.4 percent at 3,370.03 (close)

Euro/dollar: UP at $1.0400 from $1.0365

Pound/dollar: UP at $1.2589 from $1.2581

Dollar/yen: UP at 157.15 yen from 154.73 yen

Euro/pound: UP at 82.61 pence from 82.38 pence

Brent North Sea Crude: UP 0.6 percent at $73.82 per barrel

West Texas Intermediate: UP 0.7 percent at $70.50 per barrel

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L.AbuTayeh--SF-PST