* Euro, oil, gold prices climb on hopes of future easing
* Bernanke does not explicitly signal imminent monetary
* Bernanke's bearish take on unemployment drops bond yields
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 offered no clear
signal of imminent action that markets had hoped for in a
The euro and European shares rose as signs emerged of
progress toward a deal to tackle the euro zone's debt crisis.
The dollar dropped to an eight-week low against the euro and
two-week low versus the yen after Bernanke said high U.S.
unemployment is a "grave concern," remarks that reinforced
expectations for further stimulus to revive growth.
Bernanke told central bankers in Jackson Hole, Wyoming, that
progress in bringing down unemployment was too slow and that the
central bank would act as needed to strengthen the economic
He also said the Fed had to weigh the costs and the benefits
of further stimulus, but he downplayed potential risks from the
unconventional policies. He argued the Fed's asset purchases,
known as quantitative easing, had been quite effective at
boosting 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 closed up 90.13
points, or 0.69 percent, at 13,090.84. The Standard & Poor's 500
Index rose 7.10 points, or 0.51 percent, to end at
1,406.58. The Nasdaq Composite Index gained 18.25
points, or 0.60 percent, at 3,066.96.
For the week, the three indices declined. For the month, the
Dow gained 0.6 percent, the S&P 2 percent and Nasdaq 4.3
Earlier in Europe, the FTSEurofirst of top regional
shares closed up 0.5 percent at 1,082.93 in thin trade, erasing
the previous session's losses and ending the month almost flat.
MSCI's all-country world equity index rose
0.5 percent to 322.10.
"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.
Bernanke said the Fed would provide additional policy
accommodation as needed, a remark seen as 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 August payrolls report is due next Friday, days before
the next meeting of the Federal Open Market Committee on Sept.
12-13. Many analysts say there is a strong possibility the Fed
will announce a third round of bond-buying at the meeting.
The euro was up 0.6 percent at $1.2581, while the
U.S. dollar index was down 0.6 percent at 81.207.
Investors have hoped that more monetary easing would revive
economic growth and support demand for oil, for example.
Brent crude settled up $1.92 at $114.57 a barrel,
while U.S. crude gained $1.85 to settle at $96.47 a
U.S. Treasuries yields fell to their lowest levels in three
weeks as Bernanke's remarks about the economy raised
expectations among bond investors for further stimulus.
The benchmark 10-year U.S. Treasury note was up
23/32 in price to yield 1.5501 percent.
Gold surged in heavy trading to a five-month high after
Spot gold rose 1.8 percent at $1,685.89 an ounce for
its biggest one-day gain in two months.
U.S. COMEX gold futures for December delivery settled
up $30.50 an ounce at $1,687.60, with the highest trading volume
in a month, preliminary Reuters data showed.