Global shares, euro rise after Bernanke speech

NEW YORK (Reuters) - Stocks and the euro rose on Friday after Federal Reserve Chairman Ben Bernanke kept the door open for future monetary easing, although he did not deliver a clear signal of imminent action that markets had hoped for in a much-anticipated speech.

The euro and European shares rose as signs emerged of progress toward a deal to tackle the euro zone's debt crisis.

Bernanke told central bankers in Jackson Hole, Wyoming, that progress in bringing down U.S. unemployment was too slow and that the central bank would act as needed to strengthen the economic recovery.

But investors focused on what he had to say about monetary policy and the stagnation in the U.S. labor market, which he described as "of grave concern."

Bernanke said the Fed had to weigh the costs and the benefits of further stimulus, but he also downplayed potential risks from unconventional policies. He argued that the Fed's asset purchases, known as quantitative easing, had been quite effective at boosting economic growth and fostering job creation.

"I think when he talks about 'grave concern,' that says it all. Further accommodation is coming, it's just a question of how it manifests itself," said Scott Graham, head of U.S. government bond trading at BMO Capital Markets in Chicago.

The Dow Jones industrial average <.dji> was up 75.83 points, or 0.58 percent, at 13,076.54. The Standard & Poor's 500 Index <.spx> was up 5.54 points, or 0.40 percent, at 1,405.02. The Nasdaq Composite Index <.ixic> was up 13.04 points, or 0.43 percent, at 3,061.75.

In Europe, the FTSEurofirst <.fteu3> of top regional shares closed up 0.5 percent at 1,082.93 in thin trade, erasing the previous session's losses and ending the month almost flat.

MSCI's all-country world equity index <.miwd00000pus> rose 0.5 percent to 321.94.

"The basic problem for investors at this point in time is that everyone knows the Fed considers the current economic performance to be unacceptable, but is it unacceptable enough for them to act today or tomorrow before the election?" said Cary Leahy, senior managing director at Decision Economics in New York.

"I don't think this speech answers that question," he said.

Bernanke said the Fed would provide additional policy accommodation as needed, a remark that was a somewhat weaker hint of policy easing than the minutes of the Fed's last policy meeting had delivered.

"The market was looking for him to not throw any cold water on the prospects for QE and he didn't throw any cold water on it," said John Canally, investment strategist at LPL Financial in Boston.

"The timing is a little bit iffy, but he didn't come out of the box saying that there has been substantial and sustainable improvement in the economy. Because he didn't do that, I think it's just a matter of time," Canally said.

The dollar fell to a three-month low against major currencies at one point.

The euro was up 0.5 percent at $1.2562, while the U.S. dollar index <.dxy> was down 0.5 percent at 81.303.

Investors have hoped that more monetary easing would revive economic growth and support demand for oil, for example.

Brent crude was up $1.61 at $114.26 a barrel, while U.S. crude added $1.55 to $96.17 a barrel.

Treasury prices rose. The benchmark 10-year U.S. Treasury note was up 12/32 in price to yield 1.5858 percent.

Spot gold prices rose $23.35 to $1,678.80 an ounce.

(Reporting by Herbert Lash; Editing by Dan Grebler)

Source: http://news.yahoo.com/asian-shares-fall-four-week-low-bernanke-speech-003032440--finance.html

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