Wall Street rises on Bernanke comments policy

NEW YORK (Reuters)-Wall Street stocks increased from a three-day selloff on Wednesday as comments from Federal Reserve Chairman Ben Bernanke raised hopes of further stimulating the U.S. economy if necessary.

Feds earlier stimulus effort, known as the QE2, had helped the stock market to make progress with 600 billion dollars in bond purchases, which added liquidity in the economy and contributed to low interest rates.

"The possibility remains that the recent economic weakness may prove to be more persistent than expected and that deflationary risks can reemerge, implying a need for further political support," said Bernanke House Financial Services Committee.

<.vix>, CBOE volatility Index, Wall Street fear gauge, fell 7.6% to 18.37 after comments. In the last three days, VIX climbed almost 25% while the S & P 500 lost about 2.3 percent, pressured by weak results and concerns over the EU'sdebt crisis.

"The last round of quantitative easing was strictly for the benefit of inventory, and profits today, the Outlook for what is potentially a further boost, says John Kosar, research team leader at Asbury research in Chicago."But the fact that we also discuss another round, shows how the economy is still struggling. "

His comments came as investors were divided over whether the Fed would introduce another round of incentives to stimulate the economy, especially after the June security dismal jobs report. The Fed's "easy money" policy since 2008 is fueling stock market rally.

<.dji> Dow Jones industrial average was 124.27 points or 1.00 percent, at 12, 571.15. Standard & Poor <.spx> 's 500 Index was up 13.55 points, or 1.03%, at 1, 327.19. The Nasdaq Composite Index <.ixic> was up 33.64 credits, or 1.21 percent, at 2, 815.55.

Energy and materials stocks were the top winners. S & P <.gspe> energy sector index shot up 1.5 percent, while August crude futures gained 1.2%, a drop of the dollar. S & P <.gspm> materials sector index increased 1.6 percent. Baker Hughes Inc was one of the top energy sector winner, will increase 3.7 percent to $ 75.14.

Wall Street got an early boost from overseas data that showed China's economy grew faster than expected during the second quarter.

But it was still cautious over developments in Europe. Moody's downgraded Ireland's debt to junk late on Tuesday and said Ireland was likely to follow Greece in need a second operation. Irish bond yields jumped to record highs.

"Bernanke helps today to layers, but given everything else on the table, I would imagine that the market in a short time will return to focus on issues of European and U.S. budget deal soon," said Dan Ripp, Chairman of Bradley Woods and co. Ltd., New York.

News Corp shares jumped 4.6% to $ 16.06 and was Nasdaq most active stock after announcing it had withdrawn a bid of 12 billion dollars to buy 61 percent of the broadcaster BSkyB it does not already own.

News Corp is in the center of allegations that one of its tabloid newspapers committed criminal acts.

Electronic Arts Inc, computer game publisher, buys PopCap Games in some worth up to $ 1.3 billion that it is trying to ramp up its social and casual games portfolio. Shares of the Electronic Arts throw 0.4% to $ 24(10).

(Reporting by Ryan Vlastelica, editing by Kenneth Barry)

Bernanke stimulus comments increase world markets

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.