* World stocks jump, along with U.S. equities
* Bernanke offers no new measures, but Fed to meet in Sept
* Wall Street raises cash in preparation for Irene
* Brent crude advances, bonds pare gain
(Updates prices, adds details)
By Caroline Valetkevitch
NEW YORK, Aug 26 World stocks gained and the
dollar fell on Friday after Federal Reserve Chairman Ben
Bernanke left the door open for future U.S. economic stimulus.
Speaking at the Fed's annual retreat in Jackson Hole,
Wyoming, Bernanke did not offer new measures to boost the
economy but said it was critical for the economy's health to
reduce long-term joblessness. For details, see [ID:nLDE77P0JC]
U.S. stocks jumped, reversing initial losses of as much as
2 percent, while Treasuries, whose yields are at near-historic
lows, cut initial gains.
Bernanke said the central bank's policy panel would meet
for two days in September instead of one to discuss additional
monetary stimulus, offering some hope to investors for further
action down the road.
"He didn't give the market the green light for QE3 -- he
also didn't give the market the red light for QE3," said Kevin
Caron, market strategist at Stifel, Nicolaus in Florham Park,
New Jersey, referring to the Fed's quantitative easing
"By implying that inflation is viewed as not a concern, it
leaves the possibility for something down the road," he added.
The speech follows several turbulent weeks for markets,
with investors facing concerns about another U.S. recession and
escalating euro zone debt troubles, as well as a downgrade of
the top-tier U.S. credit rating.
Analysts said the very choppy trade in many markets after
Bernanke spoke reflected the concern about the U.S. economy, as
well as a realization that U.S. interest rates will stay at
record lows for years to come.
World stocks as measured by the MSCI world equity index
.MIWD00000PUS were up 0.8 percent, but are down about 11
percent since the start of the month, while ICE Brent for
October delivery LCOV1 settled at $111.36 a barrel, gaining
Bernanke's speech last year laid the groundwork for the
Fed's $600 billion bond-buying program to revive the economy
under the rubric "QE2" for the Fed's second round of stimulus,
or quantitative easing.
The dollar gained on the euro after the speech but later
shed those gains, with the euro EUR= last up 0.8 percent at
The dollar .DXY was also down 0.6 percent against a
basket of currencies.
An increase of money supply, such as the QE2 program, tends
to erode the value of the dollar relative to other currencies.
On Wall Street, the Dow Jones industrial average .DJI was
up 76.52 points, or 0.69 percent, at 11,226.34. The Standard &
Poor's 500 Index .SPX was up 10.89 points, or 0.94 percent,
at 1,170.16. The Nasdaq Composite Index .IXIC was up 46.03
points, or 1.90 percent, at 2,465.66.
The FTSEurofirst 300 .FTEU3 ended the day down 0.7
percent at 919.03 points
For a graphic on the speech, see:
For snap analysis, see:
WALL ST PREPARES FOR IRENE
Wall Street scrambled to raise cash in case Hurricane Irene
causes major disruption in trading for thousands of traders who
live in the New York, New Jersey and Connecticut.
The repurchase market, a major source of cash for Wall
Street to fund trades and operations, showed an increase in
interest rates on loans that mature on Monday, a sign markets
are worried there could be disruptions - however temporary - as
a result of the hurricane.
Interest rates on loans backed by Treasury bonds that
expire on Monday rose by several hundredths of a percentage
point from late Thursday to about 0.08 percent in the $1.6
trillion repurchase market.
In the U.S. Treasury market, benchmark 10-year Treasury
notes US10YT=RR were trading 12/32 higher in price to yield
2.19 percent, down from 2.21 percent late on Thursday.
"I think that seeing Treasuries come off a little bit here,
you're seeing some bets being unwound in the market," said Rich
Bryant, a Treasury trader at MF Global Securities in New York.
Gold rose after days of liquidation pushed bullion down
from record highs this week. Spot gold XAU= was up 2.2
percent at $1,808.60 an ounce.
On the New York Mercantile Exchange, crude for October
delivery rose for a second day and settled at $85.37 a barrel,
gaining 7.00 cents. Traders positioned ahead of the arrival of
Irene, as oil terminals, refineries, pipelines and other energy
infrastructure prepared for the stormy weekend.
(Additional reporting by Richard Leong, Steven Johnson, Ashley
Lau and Emily Flitter; Editing by Dan Grebler)