Reuters: US Dollar Report: GLOBAL MARKETS-Stocks rise, dollar weakens on Bernanke comments

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GLOBAL MARKETS-Stocks rise, dollar weakens on Bernanke comments Mar 26th 2012, 19:02 Mon Mar 26, 2012 3:02pm EDT * S&P 500 on track for best quarter since 2009 * Gold shoots up more than 1 percent * German business sentiment rises unexpectedly By Rodrigo Campos NEW YORK, March 26 (Reuters) - Global stocks rose on Monday while the dollar retreated after U.S. Federal Reserve Chairman Ben Bernanke said a continuation of easy monetary policy would be key to cutting U.S. unemployment. Bernanke, speaking to the National Association for Business Economics, said accommodative monetary policy would support demand and, over time, drive down long-term unemployment. His comments underscored views easy monetary policy would remain in place for some time and fanned expectations for more quantitative easing. Previous rounds of Fed asset purchases have weakened the dollar and boosted U.S. and global stocks. "We are clearly addicted to this highly liquid market, and Bernanke has reassured that it (will) stay up this way. The market likes these kind of reassurances," said Kent Engelke, chief economic strategist at Capitol Securities Management. "The risk trade is definitely on and money is moving out of Treasuries and into risky assets." Gains in U.S. equities pushed the S&P 500 to a more than 12 percent gain so far this year, setting it on track for its best quarter since 2009. The advance has been fuelled by months of better-than-expected U.S. economic data as investor focus shifts away from the euro zone debt crisis. In afternoon trading in New York, the Dow Jones industrial average gained 137.25 points, or 1.05 percent, to 13,217.98. The S&P 500 Index gained 15.96 points, or 1.14 percent, to 1,413.07. The Nasdaq Composite added 49.21 points, or 1.60 percent, to 3,117.13. The S&P 500, near its highest level since May 2008, is also on track to close its fourth straight month of gains. Global equities as measured by MSCI rose almost 1 percent, the largest jump in the index in two weeks. The pan-European FTSEurofirst 300 index ended up 0.89 percent. U.S. dollar denominated Nikkei futures gained 1 percent. Germany could allow two euro zone rescue funds to operate together in an effort to strengthen the region's tools against its debt crisis, in a move that further helped revive investor appetite for growth-oriented assets. U.S. government debt prices snapped a four-day winning streak as fewer worries about Europe reduced bids for lower-risk Treasuries. The benchmark 10-year U.S. Treasury note was down 5/32, with the yield at 2.2515 percent. EURO RALLIES BUT CAUTION PERSISTS The euro hit its highest level against the greenback in more than three weeks. The U.S. currency slid to a more than three-week low against the Swiss franc. The euro rose as high as $1.3339, its highest level since March 1, according to Reuters data. Against the Swiss franc, the dollar dipped as low as 0.9027, its lowest since March 1. Disappointing U.S. home sales data reinforced bets on an extended easing stance from the Fed. Contracts to purchase previously owned homes unexpectedly fell in February. "All this left the market with the nagging thought that the Fed is not quite done with economic stimulus," said Boris Schlossberg, director of FX Research at GFT in Jersey City, New Jersey. "I think they have not in any way, shape or form eliminated that possibility." Monday's rally notwithstanding, sentiment toward the euro remained cautious as investors worried about the euro zone's troubled economy. Gold futures prices rose 1.4 percent on Bernanke's comments, as the dollar weakened and as the Fed chairman's dovish stance reminded investors about the threat of inflation. Also supporting risk assets, German business sentiment rose unexpectedly for the fifth month in a row in March, signalling that Europe's largest economy is more resilient than others tied to the euro zone debt crisis. Link this Share this Digg this Email Reprints

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