Europe's main stock markets closed higher on Wednesday after US Federal Reserve chief Ben Bernanke said the US economy faced a slow but steady recovery that would require ultra-low interest rates.

London's main FTSE 100 index closed 0.52 per cent higher, the Paris CAC 40 edged up 0.23 per cent and the Frankfurt DAX inched up 0.20 per cent. The DJ Euro Stoxx 50 index of top eurozone shares gained 0.16 per cent.

"After declining for a year and a half, economic activity in the United States turned up in the second half of 2009, supported by an improvement in financial conditions, stimulus from monetary and fiscal policies, and a recovery in foreign economies," Bernanke said in a report to Congress.

But Bernanke added that tough economic conditions are "likely to warrant exceptionally low levels of the federal funds rate for an extended period," repeating a key phrase used by the central bank.

The central bank has held its base rate near zero for more than a year to support a recovery from the worst recession in decades.

The Fed's decision last week to hike interest charged on emergency loans for banks had fuelled speculation on a possible broader rate hike affecting consumer and business spending.

Analysts at market research company Briefing.com said Bernanke "reflected a slightly more cautious tone as he sought to assure markets that the low borrowing rates currently in place would remain for an extended period."

Wall Street meanwhile reacted positively to Bernanke's comments, with the Dow Jones Industrial Average climbing 0.77 per cent and the technology-heavy Nasdaq rising 0.94 per cent in afternoon trading.

Elsewhere in Europe, Brussels rose 0.48 per cent and Milan 0.58 per cent but Madrid ended 0.57 per cent lower after the government revealed a budget deficit equivalent to 9.49 per cent of gross domestic product in 2009.

The data showed Spain's tax revenues plunged because of the economic crisis.

Spain's rising debt has triggered concern that it could follow in the footsteps of Greece, which has been hit by a collapse in market confidence.

Greece also weighed on investors' minds as thousands of people took to the streets on Wednesday to protest against the government's austerity measures aimed at ending the crisis and a strike brought the country to a standstill.