Markets up after Bernanke plays down risks

SEOUL, South Korea – World stock markets mostly rose Wednesday after the Federal Reserve chief played down risks from low interest rate policies, offsetting worries that Italy’s indecisive election result will rekindle Europe’s debt crisis.

The Asian heavyweight, Tokyo’s Nikkei 225 index was the rare loser as the yen strengthened against the U.S. dollar following several months of weakness that boosted exporters. The Nikkei fell 1.3 per cent to 11,253.97.

Other Asian markets gained ground. Hong Kong’s Hang Seng advanced 0.3 per cent to 22,577.01 and South Korea’s Kospi added 0.2 per cent to 2,004.04. Australia’s S&P/ASX 200 gained 0.7 per cent to 5,036.60. Shares in mainland China, Taiwan and Indonesia also rose.

European markets stabilized after diving the day before on Italy’s indecisive election result. The FTSE 100 index of leading British companies was up 0.3 per cent to 6,292.06 and Germany’s DAX was up 0.1 per cent to 7,607.16. France’s CAC 40 rose 0.3 per cent to 3,634.03.

U.S. stocks were poised to move marginally higher. Dow futures were up 0.1 per cent at 13,873.00 and broader S&P 500 futures rose 0.1 per cent to 1,493.60.

In testimony to Congress on Tuesday, Federal Reserve Chairman Ben Bernanke expressed confidence that the central bank’s low-rate policies currently pose little risk of causing runaway inflation or a stock market bubble. That eased recent jitters the Fed would start to withdraw its super easy monetary policy.

U.S. economic indicators also gave Asian markets a lift. Home sales rose to the highest level in more than four years last month and American consumers showed confidence for the first time in three months in February.

“Asian markets held up well after U.S. stock markets showed little impact to Italy’s election results,” said Kwak Joong-bo, a Seoul-based analyst at Samsung Securities.

Samsung Electronics Co., the world’s largest maker of memory chips, televisions and mobile phones, closed flat while Hyundai Motor Co. climbed 0.7 per cent. Taiwan-based phone maker HTC Corp. added 0.2 per cent. In Japan, electronics firms led the decline. Panasonic Corp. fell 1.8 per cent and Sharp Corp. was down 1.3 per cent.

Yet stock market gains in Asia remained modest, showing that investors have not fully regained their appetite for risky assets ahead of looming automatic spending cuts due to start Friday in the U.S.

And with Italy emerging from elections on Tuesday with no clear winner, there are lingering uncertainties about the fate of deficit and debt reduction measures in one of Europe’s biggest economies.

The Italian election result drove markets in Europe markedly lower. If Italian parties fail to form a governing coalition, new elections would be required, causing more uncertainty and a leadership vacuum.

In currency markets, the euro was trading at $1.3090. The dollar weakened 0.5 per cent to 91.65 yen.

Benchmark crude for April delivery was up 37 cents to $93 a barrel in electronic trading on the New York Mercantile Exchange.




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