* U.S. stocks open higher; MSCI World index down 0.7 pct on
* Dollar gains against yen
* Italian bond yields rise by most this year
By Caroline Valetkevitch
NEW YORK, Feb 26 U.S. stocks rose and the dollar
extended gains against the yen on Tuesday after Federal Reserve
Chairman Ben Bernanke strongly defended the Fed's bond-buying
Bernanke, whose comments came in testimony to Congress, also
urged lawmakers to avoid sharp spending cuts set start taking
effect on Friday.
Financial markets were rattled last week when minutes of the
Fed's January meeting showed some officials were thinking of
scaling back its monetary stimulus earlier than expected.
"What Bernanke is saying, bottom line, indicates that there
will not be a reversal anytime soon in the stimulus program,"
said Peter Cardillo, chief market economist at Rockwell Global
Capital in New York.
Data showing new U.S. single family home sales hit a
four-and-a-half year high in January and consumer confidence
rebounded in February also boosted U.S. stocks and the dollar.
But the uncertainty generated by Italy's elections was still
rattling most other major risk asset markets. The MSCI world
equity index was down 0.7 percent, while the
pan-European FTSEurofirst 300 index was down 1.0
Southern European government bond prices sank. Italy's
10-year bond yields were up as much as half a point to 4.86
percent, their highest since mid-December.
Investors are fearful that the strength of the vote for
anti-austerity parties in the election will weaken efforts to
reform Italy's public finances and its labor laws, damaging the
euro zone's efforts to resolve its three-year old debt crisis.
U.S. FOCUS ON BERNANKE
On Wall Street, the Dow Jones industrial average was
up 60.20 points, or 0.44 percent, at 13,844.37. The Standard &
Poor's 500 Index was up 0.93 points, or 0.06 percent, at
1,488.78. The Nasdaq Composite Index was down 1.37
points, or 0.04 percent, at 3,114.88.
In the foreign exchange market, the dollar last traded at
92.18 yen, up 0.4 percent on the day. It had been trading
at about 91.98 before the data and Bernanke.
The euro last traded at $1.3064, flat on the day. It
earlier had been trading at about $1.3108, according to Reuters
U.S. Treasuries widened losses after the homesales and
consumer confidence data and headlines on Bernanke. The 10-year
note yield stood at 1.868 percent, up from 1.86
percent late on Monday. It was down 1/32 in price.