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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 chairmanAfter 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, BBC North America business correspondent, Jackson Hole, Wyoming ANALYSIS Greg Wood, North America business correspondent, Jackson Hole, Wyoming
Things are not getting worse, we are in that period before the economy grows again. Ben Bernanke is here at Jackson Hole in Wyoming in a stunning setting looking out on mountains and a lake.
Everybody is more optimistic, but still there are words of warning that financial markets need to stabilise. It is where central bankers come every year to have an informal chat about what the think the world economy is going to do.
It is still hard for consumers and businesses to obtain loans. He is reiterating comments that things are not getting worse, that we are in that period before the economy grows again.
And the US consumer is still reluctant to spend money - if they are not spending then you are not going to see a rapid growth in economic activity. They are still keeping their purse strings tight. But it is still hard for consumers and businesses to obtain loans.
So, no-one here is getting carried away with progress so far. 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."