Wall Street seesaw ends ... UP

Stocks on Wall Street rebounded higher in a seesaw session after the worst three-day selloff since the 2008 global financial crisis.

Traders moved stocks up and down as they absorbed the Federal Reserve's pledge to keep interest rates near zero at least through to mid-2013.

The Fed also sharply downgraded its view of the US economy but gave no indication of any immediate action to restore market confidence since Standard & Poor's cut the government's credit rating and investors feared the possibility of another recession.

Seven members of the Fed's open market committee voted in favour of the decision with three voting against.

Earlier, markets in Europe staged a rebound, though markets in Asia dipped again in the wake of the US credit downgrade.

At the close (8am NZ time), the Dow Jones Industrial Average was up 429.92 points, or 4.0%, to 11,239.77.

The Dow briefly turned negative shortly after the opening bell but then rallied, gaining as much as 243 points before reverting to more gyrations after the Fed's policy announcement.

The S&P 500-stock index was up 4.8% to 1172.53 while the technology-oriented Nasdaq Composite was up 5.3% at 2482.52.

Other markets: Europe up, Asia down
European stocks closed higher, breaking a seven-session losing streak, as investors finally stepped in to buy beaten-down equities after recent dramatic declines.

The pan-European Stoxx 600 index rose 1.4% to end at 232.20. It had earlier fallen as low as 217.37.

On Monday it fell 4.1%, the biggest one-day percentage fall since March 2, 2009.

Germany’s DAX 30 fell 0.1% to 5917.08 after a tumultuous session but the UK’s FTSE 100 index rebounded 1.9% to 5164.92.

In Paris, the CAC 40 index rose 1.6% to 3176.19, with auto-related and technology stocks offering support.

A torrid Asia session saw the Nikkei 225 index in Tokyo end down 1.7% at 8944.48 in contrast to Australia's rebound.

Korea's Kospi ended down 3.6% at 1801.35 after trading off as much as 9.9%, while Taiwan's Taiex slid 0.8% to 7493.12.

Hong Kong's Hang Seng Index plunged 5.7% to 19,330.70, while the Shanghai Composite Index ended little changed at 2526.07.

Both indexes have lost 20% or more from their 52-week highs recorded in November.

Commodities: Oil drops below $US80, gold tops $US1740
Crude futures turned lower, dropping below $US80 a barrel in a volatile session ahead of the Fed's policy statement.

Light, sweet crude for September delivery was down $US1.83, or 2.3%, at $US79.48 a barrel in early afternoon trading in New York, after falling to a 10-month low of $US75.71.

Brent crude on the ICE futures exchange traded $US1.24 lower at $US102.50 a barrel.

Gold settled at a fresh record ahead of the Fed’s statement. The thinly traded August-delivery contract gained $US29.80, or 1.7%, to settle at $US1740.00 an ounce after touching an intraday record of $US1779.

The most actively traded contract, for December delivery, settled $US29.80, or 1.7%, higher at $US1743 in New York. The contract set an intraday record of $US1782.50.

Currencies: Swiss franc soars
The Swiss franc soared to record highs against the US dollar, euro and pound as stocks fell after the Fed's latest meeting amid concerns about the global economy.

The euro was at $US1.4267 from $US1.4179 late on Monday. The dollar was at ¥77.14 from ¥77.77, while the euro was at ¥109.93 from ¥110.27.

The pound fetched $UK1.6241 compared with $UK1.6321, while the dollar traded at 0.7217 franc from 0.7550 franc.