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European stocks advance after Bernanke

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(Globalpost/GlobalPost)

European shares advanced on Thursday after US Federal Reserve chief Ben Bernanke said the bank had no plans to wind down stimulus until the economy was back on track.

The comments, which came as a closely watched report said growth was moderate, also boosted sentiment earlier in Asia and lifted Wall Street.

London's FTSE 100 index of leading shares rose 0.73 percent to 6,619.90 points in afternoon trade.

In Paris the CAC 40 increased 0.69 percent to 3,898.92 points, while Frankfurt's DAX 30 advanced 0.36 percent to stand at 8,284.37.

On the foreign exchange market, the European single currency dropped to $1.3079 from $1.3123 late in New York on Wednesday.

And the price of gold firmed to $1,279.75 an ounce on the London Bullion Market, from $1,297.25 on Wednesday.

"Nothing that we have not heard before was said during Bernanke's testimony and yet, the chairman managed it very well not to rock the markets and neutralise the volatility," said analyst Anita Paluch at traders Gekko Markets.

"European markets are a little hesitant though. More to come during his testimony before the Senate banking Committee later today, when he (Bernanke) returns to Capitol Hill."

In the US, five minutes into trade, the Dow Jones Industrial Average rose 0.24 percent, while the tech-rich Nasdaq Composite Index slipped 0.04 percent.

Stocks there also received an upwards nudge from weekly initial jobless claims that fell to 334,000, a two-month low and better than the 348,000 seen by analysts.

In the first of his two days of testimony to Congress, Bernanke told representatives on Wednesday that the vast bond-buying programme -- known as quantitative easing (QE) -- would remain in place until the Fed is happy the economy can stand on its own two feet.

"I emphasise that, because our asset purchases depend on economic and financial developments, they are by no means on a preset course," Bernanke told lawmakers.

When launching the $85-billion-per-month scheme in September the bank said it would only reel it in when unemployment had fallen to a satisfactory level.

Bernanke said the economy was expanding at a moderate pace and showed solid signs of strength in various areas, a view supported by the Fed's Beige Book report, which was also released on Wednesday. Bernanke is due to be grilled by Senators on Thursday.

"Given all the anticipation leading up to yesterday's testimony by the Fed Chairman it would seem that markets are no wiser now than they were beforehand with respect to the Fed's intentions," added CMC Markets analyst Michael Hewson.

"Mr Bernanke appeared at pains to stress that the pace of QE was not on a preset course and was data dependent yet we are supposed to believe that the bank wants to start the process sometime this year."

In company news, shares in the London Stock Exchange Group (LSEG) soared to the top of the FTSE 100 index on an impressive first-quarter trading update.

LSEG shares jumped 5.68 percent to 1,564 pence after news that revenues rallied 39 percent in the first quarter of its financial year, or three months to June, compared with the same period a year earlier.

In Paris, shares in struggling French automaker PSA Peugeot Citroen rose by 6.78 percent to 8.49 euros after analysts at HSBC bank recommended the stock.

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http://www.globalpost.com/dispatch/news/afp/130719/european-stocks-advance-after-bernanke