World stocks gain after Bernanke says US recovery is on track despite European debt crisis
{{#rendered}} {{/rendered}}LONDON (AP) — World markets rose Wednesday after Federal Reserve Chairman Ben Bernanke said the U.S. recovery is on track and the European debt crisis would not prove too damaging to the world's largest economy.
After some upbeat corporate news in China, the comments bolstered confidence in global markets.
Britain's FTSE 100 closed up 1.2 percent at 5,085.86, Germany's DAX was up 2.0 percent at 5,984.75 and France's CAC-40 was 2.0 percent higher at 3,446.77.
{{#rendered}} {{/rendered}}Wall Street also gained — the Dow Jones industrial average was up 1.1 percent at 10,049.04 and the Standard & Poor's 500 was 1.2 percent higher at 1,074.85.
Bernanke said Europe's debt crisis is likely to have only a "modest" impact on the U.S. recovery, and that, while the labor market will probably remain weak, the economy will expand both this year and next.
The confident views added to gains made since Asian trading — where the Shanghai Composite Index advanced 2.8 percent on news that the Agricultural Bank of China is preparing a record-size initial public offering.
{{#rendered}} {{/rendered}}The IPO is expected to raise between $23 billion and $30 billion. That would exceed the world record previously set by Industrial & Commercial Bank of China, whose $21.9 billion dual Hong Kong-Shanghai IPO in October 2006 helped make it the world's biggest bank by market value.
The Chinese bank has yet to set an IPO price for its shares, but the size of the operation indicates corporate activity is picking up around the world despite the gloom surrounding Europe's debt crisis.
Spanish bank Santander announced it was buying back from Bank of America a 24.9-percent stake in a Mexican unit for $2.5 billion, while BMW said sales were increasing.
{{#rendered}} {{/rendered}}Optimism was kept in check, however, by expectations that European growth will be weighed down for the foreseeable future by governments' deep spending cuts
Spain admitted it was having trouble reforming its labor market — a key element in resurrecting its economy — in the face of opposition from unions.
German Chancellor Angela Merkel and French President Nicolas Sarkozy called on Europe to urgently speed up efforts to regulate financial markets, particularly crack down on speculative trading.
{{#rendered}} {{/rendered}}The overall feeling in Europe is that its efforts to stem the debt crisis will come at the cost of economic growth for years to come, with only some sectors — such as exports — helped by a faster recovery in the U.S. or Asia.
"The global market mood feels like prolonged periods of gray gloom punctuated by very occasional sunny spells," said Daragh Maher at Credit Agricole CIB.
Looking ahead, investors will keep an eye on the Federal Reserve's Beige book for views on the U.S. economy's outlook, particularly the labor market.
{{#rendered}} {{/rendered}}Markets will also be preparing for the European Central Bank interest rate announcement on Thursday. Although rates are expected to be kept at record lows, attention will turn to what President Jean-Claude Trichet has to say about the debt crisis and his bank's purchases of government bonds.
Elsewhere in Asia, Hong Kong's Hang Seng finished 0.7 percent higher at 19,621.24. Benchmarks in Australia, Singapore, Malaysia and New Zealand were also up.
South Korea's Kospi shed 0.3 percent, Japan's benchmark Nikkei 225 stock average finished down 1 percent at it's lowest close since Nov. 30 as investors worried about the rise of the yen against the euro. Japan is a big exporter and Europe is one of its main trading partners.
{{#rendered}} {{/rendered}}Even signs of economic recovery in Japan — its machinery orders rose for a second straight month in April — were not enough to ease market jitters.
"Investors cannot shake off worries that the crisis could drag on for a while, slowing the region's economy and beyond," said Kazuhiro Takahashi, equity strategist at Daiwa SMBC Securities Co. Ltd. in Tokyo.
In currencies, the dollar was about flat at 91.53 yen. The euro rose to $1.2041 from $1.1971 in New York late Tuesday, having earlier this week hit four-year lows.
{{#rendered}} {{/rendered}}Benchmark crude for July delivery was up $2.62 to $74.61 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 55 cents to settle at $71.99 on Tuesday.
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Associated Press writers Pamela Sampson in Bangkok and Shino Yuasa in Tokyo contributed to this report.