08/10/2011 04:23 EDT | Updated 10/10/2011 05:12 EDT

Stock Markets On Wild Ride After Fed's Promise Of Low Interest Rates

UPDATE: The Dow Jones Industrial Average plummeted 400 points in its first 90 minutes of trading Wednesday, promising another highly volatile day on the markets as investors continued to fret over the state of the world economy and debt crises in Europe and the U.S.

Toronto's S&P/TSX composite index was down 135 points at 10:30 a.m., and gold continued its record-breaking streak, hitting $1,775 U.S. per ounce.

TORONTO - The Toronto stock market has fallen slightly following a substantial but short-lived relief rally Tuesday after the U.S. Federal Reserve promised to leave interest rates ultra-low until mid-2013.

The S&P/TSX composite index fell 8.3 points to 12,100.96.

The main index had soared 438 points as investors snapped up stocks that were beaten down during a market rout that carved 10 per cent from the TSX over the previous six sessions.

But the central problems confronting markets remain: dwindling confidence in political leaders and central bankers to get a grip on the European government debt crisis and a growing conviction that the U.S. is sliding back into recession.

A downgrade of U.S. government debt by S&P last Friday served to further sour investor sentiment.

The Canadian dollar was down 0.96 of a cent to 101.2 cents US as investors believe the Fed's stance on rates likely means the Bank of Canada is in no hurry to resume hiking interest rates.

New York markets also fell with the Dow industrials plunging 304.51 points to 10,935.26 following a 430-point jump.

In Asia today, the Nikkei index in Tokyo rose 94.26 points, or just over one per cent, to 9038.74. Hong Kong's Hang Seng index jumped 452.97 points, or 2.34 per cent, to close at 19,783.67.

Indexes in Australia, Taiwan, the Philippines and mainland China were also higher while oil prices rose to nearly $82 a barrel.

Martin Lakos, director of Sydney-based stockbroker Macquarie Private Wealth, said the Fed announcement was key to restoring some stability to the markets.

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