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GLOBAL MARKETS-Shares gain after Bernanke comments, yields slip
July 17, 2013 / 10:03 PM / 4 years ago

GLOBAL MARKETS-Shares gain after Bernanke comments, yields slip

* Bernanke flexible on timeline for stimulus program
    * Bank of America rises after strong profit growth
    * Euro falls 0.5 percent vs dollar, gold declines


    NEW YORK, July 17 (Reuters) - Stock markets around the world
rose on Wednesday and U.S. Treasuries yields slipped after
Federal Reserve Chairman Ben Bernanke said the timeline for the
U.S. central bank to end its stimulus program was not set in
stone.
    The dollar rose against the euro and yen while gold tumbled
below $1,300 an ounce
    Bernanke's flexible timing gave investors confidence and
U.S. stocks closed near record highs.
    The Fed has said it would begin scaling back its
quantitative-easing stimulus policies later this year if
economic conditions meet its targets. While Bernanke reiterated
the Fed's policy in testimony to a congressional committee on
Wednesday, he noted that asset purchases "are by no means on a
pre-set course."
    In answer to a question before the House Financial Services
Committee, Bernanke said the Fed's intention "is to keep
monetary policy highly accommodative for the foreseeable future"
because of high unemployment and below-target inflation.
    "Nothing he said drastically changes the game, but markets
have become more comfortable with Fed policy," said Andres
Garcia-Amaya, global market strategist at J.P. Morgan Funds in
New York, adding that the rise in interest rates could be enough
to push the Fed to extend its stimulus.
    The Dow Jones industrial average finished 18.67
points, or 0.12 percent, higher at 15,470.52, the S&P 500 
gained 4.65 points, or 0.28 percent, to 1,680.91 and the Nasdaq
Composite added 11.5 points, or 0.32 percent, to 3,610.
    Bank of America Corp rose nearly 3 percent to $14.31
after it posted a bigger-than-expected 70 percent jump in
quarterly profit.
    Bernanke's remarks also lifted European shares, which had
been lower after minutes from a Bank of England meeting showed
all policymakers voted against extending the bank's bond
purchase program. Much like the Fed's, the program has been
credited with boosting equity gains this year.
    In his first meeting in charge at the Bank of England, Mark
Carney, joined by the bank's other eight policymakers, voted
unanimously against more bond purchases, setting aside their
differences ahead of a soon-to-be-released review on giving
guidance about future interest rates.    
    The FTSEurofirst 300 closed up 0.6 percent while an
MSCI gauge of global stocks rose 0.2 percent.
    
    EURO WEAKENS, YIELDS FALL
    The U.S. dollar rose 0.2 percent against a basket of
currencies, in a rebound from the three-week low the dollar
index hit immediately after the release of Bernanke's prepared
statement.
    Bernanke reiterated the U.S. central bank still expects to
start scaling back its massive bond purchase program later this
year, but he left open the option of altering that plan if the
economic outlook changes.
    The euro fell 0.3 percent to close the U.S. session
at $1.3124 and the greenback strengthened 0.5 percent against
the Japanese currency at 99.57 yen.
    "I think the dollar had a mixed performance as the markets
digest how to take this message on potential tapering of asset
purchases but at the same time keeping policy accommodative for
the foreseeable future via interest rate policy," said Brian
Daingerfield, currency strategist at Royal Bank of Scotland in
Stamford, Connecticut.
    U.S. Treasuries yields hit their lowest levels in two weeks
following Bernanke's remarks.
    "I don't think there's any game-changing information. On the
margin, it's a little more dovish, but the base case hasn't
changed," said Gene Tannuzzo, portfolio manager at Columbia
Management in Minneapolis. "Most likely, tapering will happen in
September."
    Still, Bernanke led some to think that smaller bond
purchases may instead begin next year and a Fed rate increase
might be months, if not years, after QE3 ends, traders said.
    The benchmark 10-year U.S. Treasury note was up
11/32, its yield at 2.4907 percent. Yields on the 10-year have
jumped since May, when Bernanke hinted the Fed would slow its
bond purchase program this year.
   
    GOLD SLIPS
    In commodity markets, spot gold fell 1.3 percent to
$1,274.89 hurt by expectations of a winding down of bond
purchases by the Fed later this year. 
    Copper fell 1.5 percent to below $6,890 a ton,
giving up the previous session's 1.2 percent gain.
    Brent crude prices rose 47 cents to settle at
$108.61 a barrel after the U.S. government reported declines in
American crude inventories. U.S. crude traded up 48 cents
to $106.48.

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