* Dow and S&P 500 hit fresh highs on Bernanke, earnings
* Nikkei rises, yen pressured ahead of elections
* Bunds reach five-week high, tracking U.S. Treasuries
* U.S. crude advances, gold and copper edge higher
By Ryan Vlastelica
NEW YORK, July 18 Stock markets worldwide
extended their rally on Thursday as investors felt assured the
Federal Reserve would unwind its accommodative stimulus measures
Fed Chairman Ben Bernanke testified before Congress for a
second day on Thursday, this time to the U.S. Senate Banking
Committee. On Wednesday, he had reiterated that the Fed would
only start phasing out its stimulus once it is sure the economy
is strong enough to stand on its own feet.
The comments lured investors to equities, pushed major
bourses to fresh highs and put the benchmark S&P 500 index on
track for its tenth positive session out of the past 11. The
euro fell and the dollar rose against a basket of currencies.
"Bernanke has made equities the only place for most people
to go, and the rally has been entirely on him," said Mark Grant,
managing director at Southwest Securities in Fort Lauderdale.
The Dow Jones industrial average was up 89.25 points,
or 0.58 percent, at 15,559.77. The Standard & Poor's 500 Index
was up 10.11 points, or 0.60 percent, at 1,691.02. The
Nasdaq Composite Index was up 6.33 points, or 0.18
percent, at 3,616.33.
U.S. stocks were also supported by strong quarterly earnings
reports from IBM and Morgan Stanley, though Intel
Corp sank following its results. A jump in regional
factory activity boosted sentiment as well.
The MSCI International ACWI Price Index rose
European equities ended 0.9 percent higher,
outperforming U.S. markets, as the broad STOXX Europe 600 broke
above a resistance level.
The dollar rose 0.15 percent against a basket of currencies
while the euro was down 0.17 percent. The U.S.
benchmark 10-year Treasury note was down 13/32, with
the yield at 2.5378 percent.
Market participants awaited a meeting of Group of 20 finance
ministers for signs of an orchestrated approach to the end of
U.S. money-printing, which could help defuse volatility in
The G20, which meets in Moscow Friday and Saturday, includes
many of the emerging economies that have been at the sharp end
of the dollar's surge since Bernanke first signalled in May the
Fed would roll back its bond-buying program.
With no surprises from Bernanke during his congressional
testimony, currency markets were starting to focus on Sunday's
Upper House elections in Japan, which are expected to strengthen
Prime Minister Shinzo Abe and his radical stimulus strategy.
'Abenomics', as Abe's $1.4-trillion plan is known, has
caused a 14-percent drop in the yen this year.
Ian Stannard, head of European FX strategy at Morgan Stanley
in London, said he expected a further retreat once the Fed firms
up a plan to withdraw its supportive measures.
"The market is of the view the Abe administration will come
out of this very well, so post-election it will be an
interesting time because we could see the rhetoric around the
reform plans picking up," Stannard said. "If this is the case,
we will start to see the yen coming under pressure again."
Japan's Nikkei share index earlier surged 1.3
percent to an eight-week high while the U.S. dollar gained 1
percent against the yen to 100.51 yen.
In debt markets, benchmark German Bunds edged 0.1
percent higher, hovering around a five-week high.
An impending no-confidence vote against Portugal's ruling
coalition has turned the focus to peripheral euro zone debt.
The motion proposed by a minor party is seen as likely to
fail but markets will be on the lookout for any signals sent by
the three main parties, which are holding talks on a broad deal
to keep the country's bailout program on track.
Spain and France both saw smooth bond auctions on Thursday
despite a tougher backdrop, with Spain's prime minister fighting
a corruption scandal and France having just lost its last
triple-A sovereign credit rating from a major ratings agency.
Commodities, meanwhile, were mixed, with Brent oil
flat but U.S. crude futures jumping 1.4 percent as U.S.
stockpiles fell for a third straight week. Copper rose
0.3 percent and gold rose 0.8 percent.