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Markets rise on US recovery hopes | Markets rise on US recovery hopes |
(20 minutes later) | |
Stock markets have risen around the world after Federal Reserve chairman Ben Bernanke said the US economy was nearing the start of a recovery. | Stock markets have risen around the world after Federal Reserve chairman Ben Bernanke said the US economy was nearing the start of a recovery. |
"The prospects for a return to growth in the near term appear good," Mr Bernanke told a conference in Wyoming. | "The prospects for a return to growth in the near term appear good," Mr Bernanke told a conference in Wyoming. |
On Wall Street, the Dow Jones index rose more than 1%, while European markets were also sent higher. | On Wall Street, the Dow Jones index rose more than 1%, while European markets were also sent higher. |
But the Fed boss said unemployment, which is expected to top 10% in the US, would fall "only gradually". | But the Fed boss said unemployment, which is expected to top 10% in the US, would fall "only gradually". |
After contracting sharply over the past year, economic activity appears to be levelling out, both in the United States and abroad Ben Bernanke, Federal Reserve chairman | After contracting sharply over the past year, economic activity appears to be levelling out, both in the United States and abroad Ben Bernanke, Federal Reserve chairman |
Mr Bernanke was speaking as data showed sales of existing US homes rose by more than 7% in July. | Mr Bernanke was speaking as data showed sales of existing US homes rose by more than 7% in July. |
That was the largest monthly increase in the 10 years that the National Association of Realtors has been keeping records. | That was the largest monthly increase in the 10 years that the National Association of Realtors has been keeping records. |
'Slow at first' | 'Slow at first' |
But Mr Bernanke warned that the road to recovery would be a long one. | But Mr Bernanke warned that the road to recovery would be a long one. |
"The economic recovery is likely to be relatively slow at first, with unemployment declining only gradually from high levels," he said. | "The economic recovery is likely to be relatively slow at first, with unemployment declining only gradually from high levels," he said. |
The International Monetary Fund (IMF) has predicted that the US economy will expand by 0.75% next year, after earlier predicting no growth. | The International Monetary Fund (IMF) has predicted that the US economy will expand by 0.75% next year, after earlier predicting no growth. |
ANALYSIS Greg Wood, North America business correspondent, Jackson Hole, Wyoming | |
Ben Bernanke is here at Jackson Hole in Wyoming in a stunning setting looking out on mountains and a lake. | |
It is where central bankers come every year to have an informal chat about what the think the world economy is going to do. | |
He is reiterating comments that things are not getting worse, that we are in that period before the economy grows again. | |
But it is still hard for consumers and businesses to obtain loans. | |
And US consumers are still keeping their purse strings tight. | |
So there is a little bit of optimism, perhaps reflecting the fantastic setting we are in, but no-one here is getting carried away with the progress so far. | |
The Fed chief was also upbeat on the prospects for the world economy. | The Fed chief was also upbeat on the prospects for the world economy. |
"After contracting sharply over the past year, economic activity appears to be levelling out, both in the United States and abroad," he said. | "After contracting sharply over the past year, economic activity appears to be levelling out, both in the United States and abroad," he said. |
The IMF has previously said that the global economy was "starting to pull out of recession". | The IMF has previously said that the global economy was "starting to pull out of recession". |
'Bullish' | 'Bullish' |
At 1600 BST, the Dow Jones was up 123 points at 9,473. The Nasdaq and the S&P 500 also rose by more than 1%. | At 1600 BST, the Dow Jones was up 123 points at 9,473. The Nasdaq and the S&P 500 also rose by more than 1%. |
London's FTSE 100 climbed 1.8% to 4,841, while markets in Frankfurt and Paris were up by more than 2%. | London's FTSE 100 climbed 1.8% to 4,841, while markets in Frankfurt and Paris were up by more than 2%. |
"Bernanke was a little bit more bullish than most people were expecting," said Jacob Oubina, currency strategist at Forex.com. | "Bernanke was a little bit more bullish than most people were expecting," said Jacob Oubina, currency strategist at Forex.com. |
"He's saying that the global economy is starting to emerge from the recession and that the fears of a financial collapse have receded substantially. | "He's saying that the global economy is starting to emerge from the recession and that the fears of a financial collapse have receded substantially. |
"I think the market is just taking those headlines as extreme positives for the outlook." | "I think the market is just taking those headlines as extreme positives for the outlook." |