The Fed's half percentage point cut in its Fed funds rate target to 6 percent at an emergency policy meeting on Wednesday led to a record 14 per cent rally in the United States Nasdaq composite and bolstered the dollar.

But the dollar's gains proved short-lived, and analysts said the rate cut failed to change the longer term picture of increasingly slowing growth in the United States relative to the euro zone.

"The immediate knee-jerk reaction after the Fed move was misplaced," said Jeremy Hawkins, chief economic adviser at Bank of America in London.

"The near-term implication of the Fed's move is that the economy is slowing down more than people anticipated."

Traders also said interest rate differentials between the United States and the euro zone were shifting in favour of the euro, given the European Central Bank was expected to keep rates unchanged at its regular policy meeting later in the day.

(Reuters)