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Asian stocks edge higher after cautious Fed outlook

Hong Kong - Most Asian stock markets edged higher Thursday after the Fed sounded a note of caution on the world economy and its effect on US growth but left the door open for continued rate hikes.

Keeping score

Japan's benchmark Nikkei 225 index rose 0.2% to 17 196.30 and South Korea's Kospi edged up 0.1% to 1 899.28. Hong Kong's Hang Seng climbed 0.4% to 19,128.18 while the Shanghai Composite Index in mainland China lost 0.4% to 2 726.07. Australia's S&P/ASX 200 advanced 0.7% to 4 981.40. Markets in Taiwan and Southeast Asia rose.

Policy pace

The Federal Reserve issued a cautious assessment of the global economy while also downgrading its view of US growth, after officials from the central bank wrapped up their latest policy meeting on Wednesday. The Fed's December rate hike had raised expectations of several more increases this year, with the first as early as March.

However, in their latest statement officials suggested that if stock market turmoil and global economic weakness persist, they might reduce the pace of future interest rate hikes. Investors were disappointed, though, that officials did not commit outright to delaying the pace.

Analyst view

"In terms of the Fed overnight: it's clear that global central banks are now starting to be concerned about the impact of global growth worries and the latest plunge in oil prices in terms of meeting their inflation targets and as a result are now starting to sound more dovish," Shane Oliver, head of investment strategy at AMP Capital in Sydney, said in a report.

Wall Street

Major US benchmarks sank on the Fed's statement. The Dow Jones industrial average fell 1.4% to 15 944.46 and the Standard & Poor's 500 dropped 1.1% to 1 882.95. A slump in tech stocks hammered the Nasdaq composite index, which lost 2.2% to 4 468.17.

Energy

Benchmark US crude rose lost 31 cents to $31.99 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 85c, or 2.7%, to close at $32.30 a barrel on Wednesday in New York. Brent crude, the benchmark for international oils, fell 29c to $33.64/barrel in London.

Currencies

The euro slipped to $1.0891 from $1.0905. The dollar rose to ¥118.82 from ¥118.46.

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