Stock markets rise after Fed chief's speech

[August 29, 2011]  LONDON (AP) -- World stock markets rose on Monday, heartened by Federal Reserve chief Ben Bernanke's call on the U.S. government to help the economy and his refusal to rule out more monetary stimulus by the central bank.

While Bernanke announced no new economic stimulus measures -- as some investors had hoped -- in his speech in Jackson Hole, Wyoming, he did leave open the possibility of more action if another recession looks likely.

He also emphasized the strengths of the U.S. economy, said the job market will recover in the long run and called on government policies to support growth more.

"People came to realize that Bernanke is very confident about the economy," said Jackson Wong, vice president at Tanrich Securities in Hong Kong. "People were reluctant to get into the market. Now they are jumping back in."

That boosted Wall Street on Friday, and the momentum was passed on to Asia and Europe on Monday.

Germany's DAX was up 1.8 percent at 5,634.49 while France's CAC-40 rose 1.7 percent to 3,140.78. Britain's financial markets were closed for a national holiday.

Wall Street was set for more gains on the open. The Dow industrials futures were up 0.8 percent at 11,371 while the S&P 500 futures were 1 percent higher at 1,187.70.

Analysts warned market sentiment will remain fragile, however, as economic indicators this week are expected to show slowing global growth and the eurozone's debt crisis is generating uncertainty in European markets again.

In Europe, surveys are expected to show weakening business confidence and higher inflation. Traders will also eye warily the talks about Finland's request for collateral in exchange for rescue loans to Greece.

Other countries have started to demand similar conditions if Finland's deal goes through. That would eat into the value of Greece's euro109 billion ($157 billion) rescue package and undermine its capacity to get the country back on its feet.

Those concerns have nevertheless failed to dent the rise of the euro, which typically gains support when stock markets rise and investors' appetite for risk improves.

On Monday, it was up at $1.4497 from $1.4484 in late trading in New York. The dollar fell to 76.63 yen from 76.66 yen.

In Asia, Japan's Nikkei 225 rose 0.6 percent to close at 8,851.35 amid news that the country's ruling party elected Finance Minister Yoshihiko Noda its new chief, paving the way for him to be the next prime minister. Australia's S&P/ASX 200 gained 1.5 percent to 4,263.30 and Hong Kong's Hang Seng rose 1.4 percent to 19,865.11.

South Korea's Kopsi index jumped 2.8 percent to 1,829.50.

Mainland Chinese shares lost ground, with the benchmark Shanghai Composite Index falling 1.4 percent to 2,576.41. The Shenzhen Composite Index slipped 0.9 percent, to 1,159.52.

Benchmark oil for October delivery was up 5 cents to $85.42 in electronic trading on the New York Mercantile Exchange. Crude rose 7 cents to settle at $85.37 on Friday.

In London, Brent crude for October delivery was down 40 cents at $110.96 on the ICE Futures exchange.

The price of gold, which slumped from record highs last week, rose on Monday to $1,818 per ounce.

[Associated Press; By CARLO PIOVANO]

Pamela Sampson in Bangkok and Fu Ting in Shanghai contributed to this report.

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