New York - US stocks fell for the first time in three days on Thursday as investors had second thoughts about Federal Reserve actions to shore up the US financial sector.

The Fed said Wednesday it would buy 300 billion dollars in long- term government bonds, an unprecedented effort to help drive investors back into the private sector, and will purchase another 750 billion dollars in troubled mortgage-backed securities at the heart of the financial crisis.

The news drove up stocks about 2 per cent on Wednesday, but by the next day investors worried that the move would not improve the economy.

"With one hand the government is issuing debt, and with the other it's repurchasing it using paper that it is printing," Lawrence Creatura of Federated Investors Inc told Bloomberg financial news. "This is a shell game that's not going to be overlooked by global investors."

The blue-chip Dow Jones Industrial Average slid 85.78 points, or 1.15 per cent, to 7,400.80. The broader Standard & Poor's 500 Index lost 10.31 points, or 1.3 per cent, to
784.04. The technology- heavy Nasdaq Composite Index dipped 7.74 points, or 0.5 per cent, to 1,483.48.

The US currency tumbled against the euro to 73.17 euro cents from 74.2 euro cents on Wednesday, and the dollar fell to 94.53 Japanese yen from 96.22 yen. dpa