Reuters: US Dollar Report: GLOBAL MARKETS-Shares up, euro eases after Fed's mixed signals

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GLOBAL MARKETS-Shares up, euro eases after Fed's mixed signals Jul 18th 2012, 07:56 Wed Jul 18, 2012 3:56am EDT * Bernanke says Fed prepared to take further action if needed * European shares follow Wall St higher, focus on earnings * Euro easier vs. dollar ahead of 2nd day of Bernanke testimony * German 2-year bond auction to test demand for negative yields LONDON, July 18 (Reuters) - European shares edged higher but the euro eased on Wednesday as investors reacted cautiously to testimony from U.S. Federal Reserve Chairman Ben Bernanke that offered little guidance as to whether the central bank was moving closer to new stimulus. In his testimony on Tuesday, Bernanke said the economic recovery was being held back by anxiety over Europe's debt crisis and the path of U.S. fiscal policy, and he expressed unease over a stagnant jobs market. He said the central bank was considering a range of tools to help the economy but stuck to an earlier message that the Fed was waiting to see if they would be needed. "The market will continue to trade in a tight range this summer unless something catastrophic happens and the Fed has to intervene," said Justin Haque, a pan-European trader at Hobart Capital Markets. Equity markets have turned their attention to the corporate earnings outlook after some forecast-beating results from major U.S. firms raised expectations the European reporting season could also surprise markets on the upside. The pan-European FTSEurofirst 300 index was up 0.3 percent to 1044.68 points in early trade, well within a 2.5 percent trading range of the past week. The single currency gave up some initial gains after Bernanke's testimony to be around $1.2282, below Tuesday's one-week high of $1.2317, but off a two-year low of $1.2162 hit last week. Bernanke completes his semi-annual Congressional testimony by addressing the House Financial Services Committee later on Wednesday. European debt markets were focused on a German auction of up to 5 billion euros ($6.1 billion) of fresh two-year bonds as similar debt on the secondary market currently trades with a negative yield. Good demand would mean investors are so worried about the European debt crisis they are prepared to pay a premium to the German government to park their cash in its two-year paper, even though it might have a negative yield. Link this Share this Digg this Email Reprints

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