Ben Bernanke speech turns markets down

European and US stock markets slumped and the dollar strengthened after US Federal Reserve chairman Ben Bernanke gave no hints of new central bank stimulus measures in a key speech.On Wall Street the Dow Jones Industrial Average lost 1.50 per cent, the broader S&P 500 dropped 1.16 per cent and the Nasdaq fell 0.95 per cent. In Europe, Frankfurt’s DAX 30 shed 2.90 per cent, London’s FTSE 100 lost 1.96 per cent and the Paris CAC 40 dropped 1.57 per cent in late trading. Earlier, Asian markets closed mostly down. US Federal Reserve chairman Ben Bernanke offered up no new economic stimulus measures from the central bank in a speech keenly-awaited by nervous markets. Instead, Bernanke said the government needed to act to boost jobs, saying policies to strengthen growth were mostly “outside the province of the central bank.”“In the short term, putting people back to work reduces the hardships inflicted by difficult economic times and helps ensure that our economy is producing at its full potential rather than leaving productive resources fallow,” Bernanke said in a speech to central bank officials in Jackson Hole, Wyoming.“Notwithstanding this observation, which adds urgency to the need to achieve a cyclical recovery in employment, most of the economic policies that support robust economic growth in the long run are outside the province of the central bank.” Earlier on Friday the Commerce Department lowered its estimate for US second quarter growth to just 1.0 per cent, and 0.4 per cent for the first quarter — a near stagnant rate that has raised worries that the country will fall back into recession. In foreign exchange deals, the euro slid to $1.4364 from $1.4379 in New York late Thursday, with the market having largely priced in no new US Fed measures. The dollar also fell to 76.87 yen from 77.45 yen Thursday. “It is shaping up to be a very interesting and potentially volatile afternoon, with US GDP data ... followed by Bernanke’s speech at Jackson Hole,” said Joshua Raymond, chief market strategist at London-based trading group City Index. “Both factors are likely to play a significant role in how European equities close out the week,” he added.With its easy-money stimulus policy having run its course, many are worried the Fed does not have enough left in the way of monetary tools to give the faltering US economy another boost. “There’s a widespread belief that, with further intervention seemingly required to keep the US economy moving along, some solid indications will be included” in Bernanke’s address, said Cameron Peacock, an analyst at trading group IG Markets. From / Gulf Today