European Stocks Rise After Bernanke Comments

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European Stocks Rise After Bernanke Comments

Thursday, 25 February 2010 09:50

London - European major stock markets closed higher on Wednesday, after U.S. Federal Reserve Chairman Ben Bernanke says U.S. economy faces a slow recovery but will need a steady level of ultra-low interest rates.
The FTSE 100 index in London closed 0.52 percent higher at 5342.92 points, the CAC 40 in Paris rose slightly 0.23 percent to 3715.68 points and the DAX 30 in Frankfurt rose 0.20 percent to the thin end of 5615 , 51 points.

DJ Euro Stoxx index of 50 leading eurozone shares rose 0.16 percent.

"After declining for a year and a half, economic activity in the United States appeared in the second half of 2009, supported by increased financial condition, the stimulus from monetary and fiscal policies, foreign and economic recovery," Bernanke said in a report to Congress.

But Bernanke added that the difficult economic conditions "may ensure a very low level of the federal funds rate for a long period of time," repeated the key phrase used by the central bank.

The central bank has held interest rates near zero for more than a year to support the recovery from the worst recession in decades.

Fed decision last week to raise interest rates charged on emergency loans to banks has encouraged speculation on the possibility of higher interest rates that affect the broader consumer and business spending.

Analyst at market research firm Briefing.com said Bernanke's "reflect the tone a bit more cautious as he looked to reassure markets that the low current interest rates will remain for a long period of time."

Meanwhile, Wall Street reacted positively to Bernanke's comments, with the Dow Jones Industrial Average rose 0.77 percent and the technology-heavy Nasdaq rose 0.94 percent in afternoon trading.

Elsewhere in Europe, Brussels rose 0.48 percent and 0.58 percent rise Milan Madrid but ended 0.57 percent lower after the government showed a budget deficit equivalent to 9.49 percent of gross domestic product in 2009.

Data show the tax revenues fall due to Spain economic crisis.

Spain the increase in debt has triggered concerns that it could follow in the footsteps of Greece, which has been hit by the collapse of market confidence.

Greece is also pressing the minds of investors because thousands of people took to the streets on Wednesday to protest the tightening measures the government aimed at ending the crisis and the strike brought the country stuck.

Standard & Poor `s to add pressure, say could further lower the credit ratings of the Greek government in the next month, citing risks to the projections of growth and weak public support for reform measures.

Devastated global stock markets on Tuesday due to weakening of reacting to the shock U.S. consumer confidence data and the deterioration of German business confidence for the first time in nearly a year this month.

"The number of poor consumer confidence from the U.S. and the negative Ifo data has put pressure on the market down," Owen said Ireland, a financial analyst ODL Securities in London, ahead of Bernanke's statements.

Asian stock markets also traded lower on Wednesday after data United States and Europe are weaker than expected.

Tokyo fell 1.48 percent, Hong Kong closed down 0.75 percent and Sydney shrank 1.48 percent, dragged lower by mining giants BHP Billiton and Rio Tinto in commodity prices lower.

Toyota shares fell 1.50 percent in Tokyo, several hours before President Akio Toyoda was set to testify before Congress on the safety issues that have pushed the global penarikkan more than eight million vehicles.