(Updates after early European trading)

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European, Asian stocks follow Wall Street lower after Fed

meeting

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Dollar gives back some gains on most currencies after Wed

jump

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Yen weakens to 157 per dollar level after BOJ decision

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BOJ stands pat as expected

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Bank of England announces rate decision at midday

By Ankur Banerjee, Alun John

SINGAPORE/LONDON, Dec 19 (Reuters) - Stocks around the

world tumbled on Thursday, with the 10-year U.S Treasury yield

at its highest since May, a day after the Federal Reserve said

it would temper the pace of rate cuts, kicking off a busy 24

hours for other central banks.

The Bank of Japan took up the market-moving baton on

Thursday, keeping rates steady as expected, but the yen weakened

as markets took the message from Governor Kazuo Ueda's press

conference that a January rate hike was not the done deal they

had previously thought.

That, in combination with the hawkish message from the Fed,

sent the dollar up by 1% to above 157 yen, its highest since

July.

But it was not just a dollar move. The euro, under fire

against most other currencies, also gained 1.9% on the yen to

163.4.

"The market's expectation seems to be that a rate hike at

the January meeting is unlikely," said Shoki Omori, chief Japan

desk strategist, Mizuho Securities, pointing to Ueda's remarks

about the importance of wage data, due in the Spring.

In Europe, Sweden's central bank cut rates by 25 basis points

and Norway's kept its rates on hold, both as expected. The Bank

of England will announces its rate decision at midday.

FED-INDUCED SELLOFF

But the main cross asset driver remained the Fed. Even though it

cut interest rates on Wednesday as expected, Chair Jerome

Powell's explicit reference to the need for caution sent markets

into a tailspin.

All three major U.S. indexes posted their biggest daily

decline in months on Wednesday, and Europe's STOXX 600

share index declined 1%, while Asian stocks fell

0.5%, spooked by the prospect of fewer U.S. rate cuts.

That also caused a selloff in government bonds and the

benchmark 10-year Treasury yield reached 4.53% on

Thursday, up around 3 basis points, after an 11 bps jump in the

aftermath of the Fed.

European government bond yields also rose sharply in

sympathy.

U.S. central bankers now project they will make just two

quarter-percentage-point rate reductions by the end of 2025,

half a percentage point less than officials anticipated as of

September.

Markets have gone further. They are not fully pricing

another Fed rate cut until July, and suggest a reasonable

possibility of no other moves next year.

Investors also noted Powell's remarks that some officials

were contemplating the impact of Trump's plans such as higher

tariffs and lower taxes on their policies.

"The risks that are clearly inherent here, and left

partially unsaid, are what the Trump administration could bring

to the table in terms of inflationary pressure," said Rob

Thompson, macro rates strategist at RBC Capital Markets.

"If the market decides the Fed's done, whether it's Trump or

inflation picks up regardless over the next year, the risk is

that we could re-price towards hikes later on."

Apart from on the yen, the dollar retreated somewhat on

Thursday after jumping sharply on the Fed news, and hitting its

highest in over two years against a basket of peers.

The euro was last 0.55% higher at $1.0408, and the

pound was up 0.6% at $1.2646, ahead of the BoE meeting.

The British central bank is expected to leave rates steady

due to its concern about sticky services inflation.

Bitcoin briefly slipped below $100,000 after Powell said

the Fed has no desire to be involved in any government effort to

stockpile large amounts of bitcoin, though was last a touch

above that level.

Gold was last up 1.25% at $2,620 per ounce, having

hit its lowest in a month a day earlier.

Oil prices dipped on demand concerns, with brent down 0.44

at $73.09 a barrel.