LONDON (AP) — gave hope that the Federal Reserve could provide new economic incentive stock a much-needed boost Wednesday, a day after markets were shaken by fears that Europe's debt crisis spread to large economies such as Italy.
Fed Chairman Ben Bernanke says the U.S. central bank is prepared to give a further boost if the current economic lull persists. A report to Congress, he stated that monetary policy was likely to remain Loose for the foreseeable future as labor market improvements is weak.
His comments were not a promise of more economic stimulus, investors were encouraged by the idea that the Fed would not allow the world's largest economy slow down too quickly, without offering more support.
Which helped market sentiment, which had been supported by data from China shows its economy grew by 9.5 percent for the quarter April-June. Although this is lower than the previous quarter 9.7% growth rate, it alleviates concerns about a sharp slowdown and gives Beijing room checks to combat inflation.
The Chinese Government has tried to tame their economy – the world's second largest — where inflation hit a three-year high in June. Beijing has electronic interest rates five times since October and tighter control of the lending and investment.
"Today's data should allay fears that the economy is on its way to a hard landing," said Mark Williams, senior China Economist, capital Economics.
The news helped to calm investors ' nerves after days of volatile trading, particularly in Europe, where concerns grew that the debt crisis would infect core countries such as Italy, the euro area's third largest economy.
Investors were spooked by EU governments to agree on a second rescue package for Greece and their requirements to get the banks to help rescue packages being enforced at, even at the price of a debt default.
Uncertainty that left markets feared worst — shares, bonds and the euro fell dramatically. Italian bond markets seized and its stock main index swung wildly. Prices stabilized only after the Italian Government said it would accelerate approval of its austerity plan and increase its size.
Strengthened by the news, brushed markets outside a downgrade of Ireland's bonds to junk status ratings agency Moody's on Tuesday. The Agency said it sees a growing risk that country needs a second bailout in its current crisis package expires at the end of 2013.
Analysts said the report was not a shock after Moody's had downgraded Portugal a week earlier, much of the same reasons.
Recovery was strongest in Milan, where the main index rallied to close higher 1.8% and Italian bond yields edged down further. Britain's FTSE 100 rose 0.6% to 5, 906.43, while Germany DAX gained 1.3 percentage points to 7, and France's CAC 267.87 was 0.5% in the 3, 793.27.
Shares in British Sky Broadcasting closed 2 percent higher in London after News Corp pulled its takeover offer for the company in the vocal opposition in the U.K. Parliament. Stock nedsjunkna was originally on the announcement but then claims that long-term investors bought into what had become a relatively cheap stocks.
In the United States Advanced Wall Street with the Dow Jones up 1.2% to 12, 595.26, while the S & P 1.2 per cent higher at 1, 329.83.
The euro rallied 1.4% to $ 1.4177 by late afternoon in Europe, while the dollar was down 0.5% at 78.96 yen.
In Asia, index mostly closed higher thanks to strong growth as Chinese data.
Hong Kong's Hang Seng index added 1.2 percent to 21, 926.88, Shanghai Composite index increased 0.5% to 2, 768.21 and South Korea's Kospi rises 0.9 percentage points at 2, 129.64.
Japan's Nikkei 225 stock average ended up 0.4% at 9, 963.14 after the yen withdrawn from its highest level against the US dollar since mid March earlier in the day.
After the dollar fell below the level which 79-yen, described Japanese Finance Minister Yoshihiko Noda move as "somewhat one-sided." His comment sparked speculation that Japan may intervene in the foreign exchange market.
Australia's S & P/ASX 200 rose 0.4% to 4, 514.80, while New Zealand's benchmark slipped 0.2% to EUR3, 424.35.
Oil prices rose above $ 98 a barrel after a report showed U.S. crude supplies increased unexpectedly last week, suggesting demand is weak.
Benchmark oil for August delivery was up $ 1.05 to $ 98.48 per barrel in electronic trading on the New York Mercantile Exchange. Crude oil was $ 2.28 to settle for $ 97.43 on Tuesday.
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Tomoko a. Hosaka in Tokyo contributed to this report.
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