* Fed seen slightly less dovish than expected
* World equities markets fall after hitting highest inalmost six years
* Gold, euro dip
By Rodrigo Campos
NEW YORK, Oct 30 (Reuters) - Recent market trends reversedon Wednesday after a slightly less-dovish-than-expectedstatement from the Federal Reserve, with stocks and Treasuryprices turning lower while the U.S. dollar showed strength.
The Fed extended its support for a slowing U.S. economy,saying it will keep buying $85 billion in bonds per month forthe time being.
However the U.S. central bank dropped a reference to a"tightening of financial conditions observed in recent months"from its list of risks to the outlook.
Analysts had warned that any hint that the Fed could trimits stimulus in the near future could prompt a negative marketreaction. They noted that the recent rally had stretchedvaluations to a point that could encourage some profit-taking.
"Brace yourself for a December taper," said Brian Jacobsen,chief portfolio strategist at Wells Fargo Funds Management inMenomonee Falls, Wisconsin.
"The Fed was dismissive about how higher mortgage rates areaffecting the housing recovery. They also removed the statementabout their concerns regarding a deterioration in financialconditions. This sets the stage for an easy start to taper inDecember."
The Dow Jones industrial average fell 57.73 points,or 0.37 percent, at 15,622.62. The Standard & Poor's 500 Index was down 8.35 points, or 0.47 percent, at 1,763.60. TheNasdaq Composite Index was down 21.72 points, or 0.55percent, at 3,930.62.
The MSCI world equity index hit an intradaylevel not seen since January 2008 before slipping in afternoontrade after the Fed statement. European shares wereflat.
DOLLAR UP, GOLD TURNS LOWER
The U.S. dollar erased its losses against the euro and roseagainst the yen as market participants focused on the details ofthe Fed Statement.
"The fact that the Fed took out the statement on financialmarket tightness to me seems quasi-hawkish. The Fed isessentially hinting at the fact that they may taper soonerrather than later," said Boris Schlossberg, managing director atBK Asset Management in New York.
"Before the market was expecting tapering in March and nowit could very well be December. The dollar is gaining as aresult of this."
The dollar index rose 0.2 percent a day after postingits largest advance in more than three weeks.
Dollar sellers had driven the U.S. currency to nine-monthlows by the end of last week, taking their lead from a steadydecline in U.S. Treasury yields as investors anticipated andextended the period of Fed bond buying.
The Fed statement, however, turned the tables on bonds.
The 10-year Treasury note last traded down 6/32in price to yield 2.527 percent, after earlier hitting 2.473,near a three-month low of 2.471 percent hit last week.
The euro fell 0.1 percent to $1.3730 after droppingthe most in three weeks on Tuesday.
Spot gold turned slightly lower after earlier rising themost in a week. Gold was last down 0.1 percent to$1,342.14 an ounce.
Brent crude settled up 0.8 percent at $109.86 abarrel as export disruptions in Libya continue to cut suppliesto Europe and Asia, while the benchmark U.S. contract fell 1.5 percent to $96.77 a barrel after a bigger-than-expectedincrease in inventories in the United States.
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