Asian markets rise on Bernanke stimulus promise

Associated Press

BEIJING (AP) — Asian stock markets rose Thursday after Federal Reserve chairman Ben Bernanke promised to continue to stimulate the U.S. economy.

Oil stayed above $106 a barrel, near the highest level in more than a year, on hopes of stronger U.S. demand.

Hong Kong's Hang Seng jumped 2.1 percent to 21,535.74 and Seoul's Kospi added 2.4 percent to 1,867.92. China's benchmark Shanghai Composite Index surged 2.2 percent to 2,053.07. Tokyo's Nikkei 225 was the only holdout, down 0.4 percent at 14,363.46.

Markets rebounded from caution a day earlier over unexpectedly weak Chinese trade figures that suggested the world's second-largest economy is slowing even more abruptly than forecast.

"In one short and sweet statement, Federal Reserve chairman Bernanke has flicked a switch on the markets," said strategist Evan Lucas of Australia's IG Markets in a report.

Bernanke said Wednesday the U.S. needs "highly accommodative monetary policy" — or low interest rates — "for the foreseeable future."

That reassured investors who were dismayed by Bernanke's comments last month that the Fed would likely slow its bond purchases later this year and end them around mid-2014 if the economy strengthens. Some critics said the Fed bungled its communications strategy.

The Fed has been buying $85 billion of financial assets a month to keep interest rates low and encourage borrowing and spending. That stimulus has driven global stocks higher, so the prospect of reducing it caused market volatility in recent weeks.

Elsewhere in Asia, Taiwan's Taiex gained 1.8 percent to 8,154.05 and Sydney's S&P/ASX 200 rose 0.8 percent to 4,940.20. Markets in Singapore, Manila and Jakarta also rose.

On Wall Street, the Standard & Poor's 500 index rose a fraction of a point on Wednesday. The Dow Jones industrial average shed 0.1 percent.

In Europe, London's FTSE 100 dropped and the CAC-40 in Paris fell 0.1 percent on Wednesday while Germany's DAX gained 0.1 percent.

Investors were unsettled by China's unexpectedly sharp 3.1 percent fall in June exports and a 0.7 percent contraction in imports. That suggested an economic slowdown already underway might be deepening.

The International Monetary Fund cut its China 2013 growth forecast this week to 7.8 percent from 8.1 percent.

In currency markets, the dollar fell to 98.39 yen from late Wednesday's 98.83 yen. The euro was little changed at $1.3143 from $1.3140.

Crude rose 15 cents to $106.67 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained $2.99 to $106.52 on Wednesday after a report indicated U.S. stockpiles fell by far more than expected last week, in a potential sign of growing demand.

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