Stocks advance on Bernanke, data; euro rebounds against greenback

Oil prices end mixed; gold retreats

NEW YORK, Feb 27, (Agencies): Global stock indexes rose on Wednesday as Federal Reserve Chairman Ben Bernanke reaffirmed his strong support for the Fed’s stimulus efforts, while the euro edged up after solid demand at an auction of Italian government debt.

Data on US housing and durable goods added to bullish sentiment in stocks. The US benchmark S&P 500 was up more than 1 percent.

Bernanke’s comments came in his second day of testimony in Congress. His defense on Tuesday of the Fed’s monetary stimulus, which eased worries over a possible early retreat from its policy of bond purchases, helped US stocks rebound from their worst decline since November.

The euro rose for the first time in three sessions, climbing as high as $1.3129. It last traded at $1.3094, up 0.3 percent on the day.

The MSCI world equity index was up 0.8 percent, and the pan-European FTSEurofirst 300 index ended 0.9 percent higher.

The European index was helped by gains in Italy’s benchmark index, which jumped 1.8 percent after falling 4.9 percent on Tuesday.

US economic data also underpinned the market, with durable goods orders excluding transportation increasing 1.9 percent, the largest gain since December 2011, and well above economists’expectations of a 0.2 percent gain. Another report on Wednesday showed that contracts to buy previously owned homes approached a near three-year high last month. US Treasuries pared most of their earlier price gains as investors prepared for the Treasury to auction new seven-year notes.

Small price gains were maintained on safety buying on worries over the automatic US spending cuts due to take effect on Friday unless lawmakers reach a budget deal and on the political uncertainty in Italy.

US

Wall Street opened little changed as investors awaited a second round of testimony in Congress by Federal Reserve Chairman Ben Bernanke for clarity on the longevity of the Fed’s economic stimulus program.

Calming some jitters over the euro zone, Italian debt prices and European stocks rose on Wednesday after Italy sold the maximum amount of bonds it planned to offer in a debt auction though borrowing costs soared. Bernanke will make his second appearance before the Financial Services Committee at 10:00 a.m. ET (1500 GMT).

A day earlier, Bernanke strongly defended the Fed’s monetary stimulus efforts before Congress, easing financial market worries over an early retreat from the Fed’s bond buying program, which had been triggered by minutes of the Fed’s January meeting released a week ago.

Despite the bounce, the S&P 500 was unable to move back above 1,500, a closely watched level that had been technical support until recently, but may now prove a resistance point.

The Dow Jones industrial average gained 1.76 points, or 0.01 percent, to 13,901.89. The Standard & Poor’s 500 Index dropped 0.36 points, or 0.02 percent, to 1,496.58. The Nasdaq Composite Index gained 0.70 points, or 0.02 percent, to 3,130.34.

The benchmark S&P 500, up 6 percent for the year, was within reach of record highs a week ago, before the minutes from the Fed’s January meeting were released. Since then, the index has shed 1 percent as the minutes raised questions about whether the Fed may slow or halt its economy-stimulating measures soon. Economic data was in focus with homes data due out at 10:00 a.m. ET (1500 GMT).

Europe

European shares found firmer footing on Wednesday, having tumbled lower in the previous session after the inconclusive Italian election, as investors used the opportunity to buy back in on beaten down assets.

The FTSEurofirst 300 closed up 10.33 points, or 0.9 percent at 1,160.58, led by strength in benchmark indexes in Italy and Spain, which had fallen 4.9 and 3.2 percent, respectively, on Tuesday after the election stalemate renewed concerns about the euro zone’s future.

“There’s a lot of money ready to go in on the dips and people do tend to invest by looking in the rear-view mirror and there’s nothing that increases confidence more than a market that has performed well,” Peter Clark, chief investment officer at Igenious Asset Management, said.

The euro zone blue chip index and the broader STOXX 600 remain up around 9 percent and 7 percent, respectively, since November as central banks stepped in with unprecedented support the global financial system. France’s CAC 40 index was among the top performing euro zone country indexes with a 1.9 percent rise, aided by robust results newsflow from Bouygues and EADS.

Bouygues jumped 13.2 percent after the construction-to-media conglomerate unveiled a 3 percent rise in full-year sales, while maintaining its dividend.

Airbus parent EADS advanced 6.5 percent as it predicted higher profit this year on the heels of stronger than expected 2012 earnings and a clampdown on costs.

British engineer Weir jumped 7.3 percent after posted a forecast-beating 12 percent rise in profits in 2012.

British oil services firm Petrofac and Portuguese retailer Jeronimo Martins, however, fell 6.3 percent and 6.1 percent respectively after both missed profit forecasts, while Kazakh miner ENRC shed 2.6 percent after warning of significant asset writedowns.

On the whole, European earnings have underwhelmed in the current quarter. Companies have so far reported on average a 13.6 percent contraction in quarterly earnings year-on-year, which has helped contribute to the euro zone blue chip index and the broader STOXX 600 falling around 6 percent and 2 percent since the end of January.

The falls, however, have allowed earnings forecasts to catch up with the recent moves in valuation — price-toearnings ratio are at post credit-crisis highs — which could benefit equities in the longer-term.

UK

Britain’s FTSE 100 edged higher on Wednesday, with some investors using the previous day’s steep fall to snap up stocks at cheaper levels, reassured by solid US data and prospects of sustained central bank stimulus.

Stronger-than-expected US housing data gave the market a further boost in afternoon trade, helping buildings supplies group Wolseley add 2.3 percent.

The benchmark UK index FTSE 100 index closed up 55.44 points, or 0.9 percent, at 6,325.88 points, recovering around two-thirds of Tuesday’s 85 point drop suffered after Italian elections ended in a stalemate.

However, volumes were around 20 percent lower than during the previous session’s sell off, as investors remained concerned about the political uncertainty in Italy and the possible repercussions for the euro zone as a whole.

Wary of the broader macro uncertainty, investors looked for as much clarity as possible on the micro level, punishing any signs of vagueness from corporates.

Asia

Asian markets mostly rose on Wednesday after US Federal Reserve head Ben Bernanke reaffirmed the central bank’s huge monetary easing scheme, but a stronger yen sent Tokyo lower.

Investors remained hesitant and the euro came under pressure after Italy’s election results which left no party in overall control, raising concerns that uncertainty in Rome could see the eurozone return to the dark days of crisis.

Tokyo closed down 1.27 percent, or 144.84 points, at 11,253.97, Sydney was up 0.66 percent, or 33 points, at 5036.6, and Seoul rose 0.20 percent, or 4.03 points, to 2,004.04.

Shanghai closed up 0.87 percent, or 19.88 points, at 2,313.22, while Hong Kong finished 0.25 percent stronger, adding 57.32 points to 22,577.01. In other markets: Manila closed 0.22 percent lower, shedding 14.40 points to 6,616.27.

Megaworld Corp. fell 2.05 percent to 3.82 pesos and Alliance Global Group dropped 2.40 percent to 20.30 pesos, while Bank of the Philippine Islands eased 1.67 percent to 105.80 pesos.

Taipei rose 0.22 percent, or 17.08 points, to 7,897.98.

Taiwan Semiconductor Manufacturing Co. was 0.97 percent higher at Tw$104.5 and leading integrated chip design house MediaTek added 1.06 percent to Tw$333.5.

Singapore rose 0.21 percent, or 6.86 points, to close at 3,261.12.

Keppel Corp gained 1.22 percent to Sg$11.61 while DBS Group fell 0.46 percent to Sg$15.10.

Bangkok slipped 0.80 percent, or 12.27 points, to 1,518.05.

Coal producer Banpu closed 0.77 pecent lower at 387.00 baht, while PTT fell 0.87 percent to 341.00 baht.

Kuala Lumpur shares ended flat at 1,624.14.

Malayan Banking fell 0.2 percent to 9.12 ringgit, while Telekom Malaysia shed 0.2 percent to 5.32. AirAsia gained 8.3 percent to 2.86 ringgit.

Mumbai rose 0.72 percent, or 137.27 points, to 19,152.41.

India’s private carrier Jet Airways jumped 19.27 percent to 534.85 rupees while engineering giant Larsen and Toubro rose 3.16 percent to 1,410.45 rupees.

Oil

World oil prices were mixed on Wednesday after the United States reported a smaller-than-expected rise in its crude stockpiles and as markets tracked uncertainty over Italy’s political future.

Brent North Sea crude for delivery in April dipped four cents to $112.67 a barrel in late London deals.

New York’s main contract, light sweet crude for April climbed 40 cents to $93.03 a barrel.

The US Department of Energy on Wednesday said that American crude inventories rose by 1.1 million barrels last week, less than half the amount predicted by analysts.

Crude futures had fallen on Tuesday, with Brent closing down $1.73 a barrel, amid uncertainty stemming from Italy’s inconclusive elections and expectations of fresh increases in bulging US crude inventories, dealers said.

Gold

Gold retreated on Wednesday, after rising more than 1 percent in the previous session, as fund investors cashed in some gains ahead of a second day of testimony by Federal Reserve Chairman Ben Bernanke.

The metal posted its biggest one-day rise in three months on Tuesday after Bernanke provided reassurance on the Fed’s commitment to loose monetary policy, burnishing bullion’s appeal as a hedge against inflation.

Spot gold was down 0.4 percent to $1,606.26 an ounce at 1436 GMT, off a 1-1/2-week high of $1,619.66 on Tuesday. The metal had touched a sevenmonth low of $1,554.49 on Feb. 21.