New York - Major US stock-market indices closed higher Wednesday after the Federal Reserve kept interest rates steady and sounded more positive on US economic growth.

The US central bank kept its benchmark federal funds rate at 2 per cent, after slashing 3.25 percentage points since September.

A statement from the Fed's monetary-policy board sounded more optimistic on economic growth but warned of greater inflation risks.

"Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased," the Federal Open Market Committee statement said.

Financial shares fell on the Fed's warning of an "ongoing housing correction" and comment that "financial markets remain under considerable stress."

The rate of housing sales was down 40 per cent in May from a year earlier, the Commerce Department said, signalling that the US housing crisis, which helped precipitate the wider economic downturn, has yet to reach bottom.

The blue-chip Dow Jones Industrial Average edged up 4.4 points points, or 0.04 per cent, to 11,811.83. The broader Standard & Poor's 500 was up 7.68 points, or 0.58 per cent, to 1,321.97. The technology-heavy Nasdaq Composite Index gained 32.98 points, or 1.39 per cent, to 2,321.97.

The US currency dropped against the euro to 63.82 euro cents from 64.23 euro cents on Tuesday. The dollar edged higher against the Japanese currency to 107.87 yen from 107.83 yen on Tuesday.

Gold fell 9.30 dollars to 882.30 dollars per fine ounce. (dpa)