U.S. stocks recover a bit, others sag

By Steven C.Johnson

NEW YORK (Reuters) - U.S. stocks rebounded on Wednesday but equity markets across Europe and Asia were still swooning a day after Wall Street's blue chips suffered their biggest daily point loss since the September 11, 2001 attacks.

U.S. investors appeared to be taking advantage of cheap equity prices, helping to push all three major indexes higher. But trading remained fairly volatile after Tuesday's equity-led sell-off. The Dow Jones industrial has traded in a range exceeding 160 points over the day..

The equity market's rebound hit its stride after Federal Reserve Chairman Ben Bernanke told Congress there didn't appear to be a single trigger for the global stock slump on Tuesday. Bernanke also said he expects moderate U.S. economic growth to continue.

Those remarks weighed on U.S. Treasury debt prices, already lower on the day as investors took a breather after bidding bonds up to their biggest daily gains in two years on Tuesday.

"I think the majority of people viewed yesterday's move as not surprising but a little overdone, and some of the comments from the Fed chairman are certainly helping to restore confidence in the markets today," said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.

Lou Brien, strategist with DRW Trading Group in Chicago, said, "you are seeing some of the safe-haven trade being taken out of the long end of the Treasury market."

The Dow Jones industrial average .DJI was up 55.68 points, or 0.46 percent, at 12,271.92. The Standard & Poor's 500 Index .SPX was up 8.45 points, or 0.60 percent, at 1,407.49. The Nasdaq Composite Index .IXIC was up 9.25 points, or 0.38 percent, at 2,417.11.

Benchmark U.S. 10 year Treasury notes were down 14/32 in price to yield 4.57 percent.

China's main Shanghai stock index .SSEC, whose 9 percent dive on Tuesday on regulatory concerns was cited by some as sparking the global selloff, bounced back almost 4 percent, but it stood alone among Asian markets.

Currency markets also steadied after one of the most volatile sessions in years, with the yen trading modestly lower against the dollar.

The previous session the Japanese currency had staged a lightning rally to 10-week highs versus the dollar when investors unwound yield-dependent yen carry trades in a bid to avert risk.

The dollar was up 0.4 percent to 118.40 yen after falling below 118 a day ago. Bernanke's remarks also helped it shake off data showing a decline in January new home sales, sending the euro down to $1.3220 compared with $1.3240 late Tuesday.

But a report on Wednesday showing the U.S. economy expanded at a weaker-than-expected 2.2 percent rate in the final three months of last year may keep investors wary of the dollar.

"The truth is that weakening in the currency will probably continue. Good data is clearly becoming more sparse and today's reports, if anything, just reinforce the view the Fed is done tightening," said Mark Meadows, currency strategist at Tempus Consulting in Washington D.C.

U.S. crude oil also fell amid anxiety about growth in the world's biggest oil consumer, slipping 83 cents, or 1.35 percent, to $60.63 per barrel.