(Reuters) - Even as consensus built within the Federal Reserve in June about the likely need to begin pulling back on economic stimulus measures soon, many officials wanted more reassurance the employment recovery was on solid ground before a policy retreat. Financial markets have largely converged on September as the probable start of a reduction in the pace of the U.S. central bank's $85 billion in monthly bond purchases, but minutes of the Fed's June meeting released on Wednesday suggested that might not be a sure bet.
KEY POINTS: "Several members judged that a reduction in asset purchases would likely soon be warranted," the minutes said. But they added that "many members indicated that further improvement in the outlook for the labor market would be required before it would be appropriate to slow the pace of asset purchases." * Global investors have recently recovered from a mild bout of panic that followed Fed Chairman Ben Bernanke's roadmap for an end to so-called quantitative easing, which he said would likely draw to a close by the middle of next year. Financial market fears have been allayed in part by a chorus of Fed officials who have sought to reassure traders that the end of asset buys will not lead to imminent interest rate hikes.
JOSEPH TREVISANI, CHIEF MARKET STRATEGIST, WORLDWIDEMARKETS, WOODCLIFF LAKE, NEW JERSEY:
"The Fed minutes, not surprisingly, reinforce Chairman Bernanke's point that improvement in the economy will mean a wind down of quantitative easing. The first mention of QE tapering was six weeks ago on May 22nd, and despite some concern about the rapid rise of interest rates, the new direction has been confirmed several times. This is the Fed transparent communication policy in action."
ROBBERT VAN BATENBURG, DIRECTOR OF MARKET STRATEGY AT NEWEDGE USA LLC IN NEW YORK:
"I don't see this as a massive surprise. The market is moving away its concerns about tapering and towards about the timing when it will normalize interest rates and who will replace Bernanke. For bonds, in terms of monetary stimulus, a lot has been priced into the yield curve already. For stocks, the S&P has benefited from the turmoil in China and Europe. It's become a kind of a safe haven even with the prospects of tapering."
MICHAEL MATOUSEK, HEAD TRADER AT U.S. GLOBAL INVESTORS IN SAN ANTONIO:
"I think the market had priced in several weeks ago that the tapering would be happening, and I think right now what the market is basically telling us with the rally on this news is that it overcorrected. People overreacted to the rumor, people were skittish, they started hitting the sell button right away."
IRA JERSEY, INTEREST RATE STRATEGIST, CREDIT SUISSE, NEW YORK:
"The committee asked the Chairman to make an explicit distinction between the asset purchases and the forward guidance in his press conference. This is the first time that I remember them saying that it's too difficult to say in a statement in a succinct fashion so we want you to go out and try to explain it to the media and the general public.
"Half of the participants said that they were interested in ending QE by the end of this year. That is kind of hawkish, though the market hasn't taken it that way yet."
TOM PORCELLI, CHIEF U.S. ECONOMIST, RBC CAPITAL MARKETS, NEW YORK:
"The key takeaway I get from the minutes is that they are very much in line with the commentary we heard from Bernanke at his post-meeting conference.
"From the headlines alone I did not get much additional information on guidance beyond what Bernanke told us last month and so there is not much new here."
WAYNE KAUFMAN, CHIEF MARKET ANALYST AT ROCKWELL SECURITIES IN NEW YORK:
"The initial read seems to be positive and that there are no negative surprises. We seem to be shooting up. That doesn't surprise me since the Fed has been so transparent with what it wants to do. How much more transparent can they be? But of course I'm looking ahead to his speech later. Tapering issues remain the number one factor facing markets."
STOCKS: U.S. stock indexes pared losses to turn slightly positive
BONDS: U.S. bond prices were slightly higher
FOREX: The dollar fell against the euro
(Americas Economics and Markets Desk; +1-646 223-6300)