* Bernanke does not explicitly signal imminent monetary
* Euro, oil rebound after Nasdaq briefly turns negative
* Gold prices rebound too as Treasury prices gain
By Herbert Lash
NEW YORK, Aug 31 Stocks and the euro rose on
Friday after Federal Reserve Chairman Ben Bernanke kept the door
open for future monetary easing, although he did not deliver a
clear signal of imminent action during a highly anticipated
The euro and European shares rose as signs emerged of
progress toward a deal to tackle the euro zone's debt crisis.
Bernanke told central bankers in Jackson Hole, Wyoming, that
progress in bringing down U.S. unemployment was too slow and
that the central bank would act as needed to strengthen the
economic recovery. But investors focused on what he had to say
about monetary policy and the stagnation in the U.S. labor
market, which he described as "of grave concern."
Bernanke said the Fed had to weigh the costs as well as the
benefits of further stimulus, but he also downplayed potential
risks from the unconventional policies. He argued that the Fed's
asset purchases had been quite effective at boosting economic
growth and fostering job creation.
"I think when he talks about 'grave concern,' that says it
all. Further accommodation is coming, it's just a question of
how it manifests itself," said Scott Graham, head of U.S.
government bond trading at BMO Capital Markets in Chicago.
The Dow Jones industrial average was up 128.09
points, or 0.99 percent, at 13,128.80. The Standard & Poor's 500
Index was up 11.22 points, or 0.80 percent, at 1,410.70.
The Nasdaq Composite Index was up 27.79 points, or 0.91
percent, at 3,076.51.
"The basic problem for investors at this point in time is
that everyone knows the Fed considers the current economic
performance to be unacceptable, but is it unacceptable enough
for them to act today or tomorrow before the election?" said
Cary Leahy, senior managing director at Decision Economics in
"I don't think this speech answers that question," he said.
The FTSEurofirst 300 index of top European shares
was up 0.5 percent, clawing back a short dip after Bernanke's
speech, at 1,083.32. An index of world stocks
was up 0.7 percent at 322.60.
Bernanke said the Fed would provide additional policy
accommodation as needed, a remark that was a somewhat weaker
hint of policy easing than the minutes of the Fed's last policy
meeting had delivered.
"The market was looking for him to not throw any cold water
on the prospects for QE and he didn't throw any cold water on
it," said John Canally, investment strategist at LPL Financial
"The timing is a little bit iffy, but he didn't come out of
the box saying that there has been substantial and sustainable
improvement in the economy. Because he didn't do that, I think
it's just a matter of time," Canally said.
The euro was up 0.8 percent at $1.2600, while the
U.S. dollar index was down 0.7 percent at 81.154.
Investors have hoped that more monetary easing would spur
economic growth and support demand for oil, for example.
Brent crude was up $1.16 at $113.81 a barrel, while
U.S. crude added $1.62 to $96.24 a barrel.
Treasury prices rose. The benchmark 10-year U.S. Treasury
note was up 9/32 in price to yield 1.5977 percent.
Spot gold prices rose $19.16 to $1,674.70 an ounce.