World Market Review and Indian Stock Market Analysis By Nirmal Bang

BSEThe Federal Reserve will slow its purchases of mortgage securities, seeking to avoid disrupting the housing market as an economic recovery takes hold. "The Committee will gradually slow the pace of these purchases in order to promote a smooth transition in markets and anticipates that they will be executed by the end of the first quarter of 2010," the Federal Open Market Committee said in a statement today after meeting in Washington. The $1.45 trillion program was scheduled to cease by the end of this year. The Fed has bought about $862 billion of its $1.25 trillion agency mortgage? backed securities program, and $129.2 billion of a $200 billion program of U. S. agency bonds.

The FOMC's statement said "substantial resource slack" and stable long? term inflation expectations mean that "the Committee expects that inflation will remain subdued for some time." Officials left the target rate for overnight loans between banks at a record low of between zero and 0.25 percent.

The Fed, following a two? day policy meeting, changed the wording in the final paragraph of its statement to say it will continue to employ a "wide range of tools" to bolster the economy. In its August statement, it said it would use "all available" tools.

U. S. stocks fell, pulling benchmark indexes down from their highest levels in almost a year, amid concern the Federal Reserve is nearing the end of its efforts to lift the economy out of recession. Treasuries rose and the dollar strengthened, dragging down commodity prices.

Japanese stocks rose after the yen retreated from earlier gains against the dollar, boosting companies relying on U. S. demand, and analysts' upgrades stoked expectations earnings will improve. Japan's exports fell for an 11th month in August as the economic recovery struggled to gain traction. Shipments abroad dropped 36 percent from a year earlier compared with a 36.5 percent decline in July.

Most Asian stock markets fell, led by commodity companies, after raw? material prices declined.