Europe’s main stock markets rounded off the week on a high note yesterday as US Federal Reserve chief Ben Bernanke cheered investors with a promise to aggressively tackle a slowdown in growth.
London’s FTSE 100 index of leading shares closed up 0.89 per cent at 5,201.56 points after official data showing Britain’s economy growing at its fastest pace for nine years in the second quarter.
In Paris, the CAC 40 rose 0.93 per cent to 3,507.44 points and in Frankfurt the DAX added 0.65 per cent to 5,951.17 points.
The Stoxx 50 index of leading eurozone companies gained 0.90 percent to 2,630.35 points.
On Wall Street, the blue-chip Dow Jones Industrial Average showed a gain of 0.57 per cent to 10,042.72 shortly before European markets closed while the broader S&P 500 index was up 0.52 per cent to 1,052.70.
US Federal Reserve chief Ben Bernanke said yesterday that the central bank would take more aggressive steps to boost growth if the economic outlook “deteriorated significantly”.
“US Fed chairman Ben Bernanke now appears willing to discuss all the central bank’s options for introducing further policy stimulus,” said Capital Economics senior analyst Paul Ashworth.
The comments were his strongest signal yet that the Fed could resume massive purchases of longer-term debt if the economy worsened, a move that would add to the Federal Reserve’s already bloated balance sheet.
“What the market seized on was that if the American economy continues to struggle the Fed will step in,” said broker Xavier de Villepion with Paris-based Global Equities.
Bernanke spoke just after the US government slashed second quarter growth in the world’s largest economy to a pace of 1.6 per cent, signalling a more pronounced slowdown in the recovery from recession.
Gross domestic product growth in the April-June period fell from 3.7 per cent in the first quarter on the back of a massive trade deficit and weak private inventory investment, the Commerce Department said.
“The market was bracing for bad news on the GDP, I think it was quite critical that we saw a fairly decent number, not only the headline but why that number missed (expectations) is as important,” said Marc Pado, an analyst at Cantor Fitzgerald.
Earlier Japanese shares overcame early losses yesterday to end higher as investor hopes brightened on expectations Tokyo could soon announce new measures to reinvigorate the economy and counter the effects of a strong yen.
The headline Nikkei index ended up 0.95 per cent at 8,991.06 points.