* Solid Italy debt sale strengthens euro after election
* U.S. stocks rise; focus on Bernanke
* World stocks also gain; U.S. bonds up
By Caroline Valetkevitch
NEW YORK, Feb 27 Global stock indexes rose on
Wednesday as Federal Reserve Chairman Ben Bernanke repeated his
strong support for the Fed's stimulus efforts, while the euro
edged up after solid demand at an auction of Italian government
Bernanke's comments came in his second day of testimony in
Congress. His defense on Tuesday of the Fed's monetary stimulus,
which eased worries over a possible early retreat from its
policy of bond purchases, helped the S&P 500 rebound from its
worst decline since November.
"Bernanke's comments will keep liquidity in place in the
market and every dip now is being viewed as an opportunity to
get in," said Dan Veru, chief investment officer at Palisade
Capital Management, in Fort Lee, New Jersey.
Some markets also were relieved as Italy sold all 6.5
billion euros of the 5- and 10-year bonds offered to investors.
It could have chosen to sell less, though it paid more than half
a percentage point more in interest than before its election.
Two days after the vote offered no party a majority, markets
had been concerned about the country's finances.
Investors fear the strength of the vote for anti-austerity
parties in Italy could weaken efforts to reform public finances
and labor laws and damage the euro zone's efforts to resolve its
three-year old debt crisis.
Italian bonds and those of other euro zone countries
suffering concern over their creditworthiness were helped by the
sale, with safe-haven German bonds falling before
The euro rose as high as $1.3129 and last traded at
$1.3118 EUR=, up 0.4 percent on the day.
The MSCI world equity index was up 0.6
percent, and the pan-European FTSEurofirst 300 index
rose 0.9 percent, both gaining along with U.S. stocks.
On Wall Street, the Dow Jones industrial average was
up 93.43 points, or 0.67 percent, at 13,993.56. The Standard &
Poor's 500 Index was up 11.63 points, or 0.78 percent, at
1,508.57. The Nasdaq Composite Index was up 29.39
points, or 0.94 percent, at 3,159.04.
Italian 10-year yields fell 7 basis points to
4.83 percent in the secondary market while German Bund futures
were up 27 basis points on the day at 145.09 after the sale.
Italy and Spain's need to change the shape of their
economies, boost growth and reduce debt, have been at the heart
of the euro zone's troubles for over a year. But fears have
eased substantially since the European Central Bank said it
would do whatever was necessary to prevent a break-up of the
U.S. BOND PRICES UP
U.S Treasuries gained in price and benchmark yields traded
near their lowest levels in a month as concern over the effect
of government spending cuts on U.S. economic growth boosted
demand for safe-haven debt.
Benchmark 10-year Treasuries gained 2/32 in
price to yield 1.88 percent, down slightly from 1.89 percent
late on Tuesday. The notes have rallied from yields of around 2
percent last week.