The U.S. Federal Reserve announced Wednesday another strategy to reduce the costs of long-term loans and reinforce the nation's slumping housing industry.

This came about in the wake of growing risks to the lagging U.S. economy.

The Federal Reserve declared that it will dispose of Treasury bonds worth $400 billion to meet the same amount of long-standing government liability in an effort to propel the feeble recovery that turned sluggish during the first quarter of 2011.

"Recent indicators point to continuing weakness in overall market conditions, and the unemployment rate remains elevated," said the Federal Reserve Board of Governors in a statement following a lengthy discussion.

Aside from re-evaluating its options, the central bank stepped up its attempts to push the housing sector by putting in returns from housing-related arrears into the credit industry.

Stocks fell again after the Fed's decision.

Selling picked up the pace before trading ended with banking institutions and insurance firms among the big losers. Bank of America lost 7.5 percent to $6.38 and Prudential Financial Inc dropped 6.6 percent to $45.73.

The Fed's new scheme, called "Operation Twist," is the latest in a cycle of measures designed to revitalize the faltering economy. But many investors doubt its effect.

The euro and oil prices plunged Monday, but U.S. stocks and the euro picked up from their lowest levels in late trading after the government of Greece said it was about to finalize an accord with international financing institutions.

Worries that Europe's debt crisis would spead further had driven investors to turn to the U.S. dollar and government bonds.

"A little reason for a little buoyancy in the market, but we've seen this before, just a reminder," declared Peter Kenny, managing director of Knight Capital in New Jersey.

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http://au.reuters.com/article/2011/09/21/us-markets-stocks-idUSTRE7850EA20110921

http://au.reuters.com/article/2011/09/19/us-markets-global-idUSTRE77L0AE20110919