Operation Twist fails to lift US markets

US markets slipped into the red sharply overnight after the Federal Reserve announced it will extend its Operation Twist programme, instead of introducing a third round of quantitative easing.

Investors viewed the measures as cautious steps by the Fed to stimulate the economy, with many hoping for sterner action in the form of QE3. Investors were also spooked after the US growth forecast for this year was cut substantially. The world's largest economy is now expected to grow at 2.4% this year, down from the previous estimate of 2.9%, as the eurozone crisis continues to impact countries around the globe. Following the growth warning, the Dow Jones fell as much as 0.7% to 12,749 at one stage, while the S&P 500 declined 0.78% to 1,347.43. Both indices recovered somewhat ...