Bernanke testimony boosts European stocks

Europe\'s main stocks shot higher Wednesday after US Federal Reserve chief Ben Bernanke indicated that the end was not near to its easy money policies. London\'s FTSE 100 index of leading shares added 0.53 percent to 6,840.27 points to stand at a 13-year high, while in Frankfurt the DAX 30 index set a fresh record high, climbing 0.69 percent to 8,530.89 points. In Paris the CAC 40 rose 0.37 percent to 4,051.11 points, a two-year high. \"After trading for most of the day in or around break even European markets went on another ramp higher as [Bernanke] ... reinforced the prospect that we remain quite some way from ... the Fed adjusting the pace of their current stimulus program,\" said CMC Markets Analyst Michael Hewson. Bernanke\'s \"comments in prepared remarks that \'premature tightening risks slowing or ending the recovery\' sent the DAX to new record highs and the FTSE100 ever closer to its all-time highs at 6,950,\" he added. The Fed chief pointed to continued weaknesses in the economy, especially high joblessness and the drag on growth of federal spending cuts. Such weaknesses justify the Fed\'s aggressive bond-purchase policy aimed at keeping longer-term interest rates low, Bernanke said in a statement to Congress\'s Joint Economic Committee. His testimony came amid much speculation over when the Fed will begin slowing a key tool for stimulating the economy, its $85 billion a month bond purchases known as quantitative easing. US stocks also moved higher, with the Dow Jones Industrial Average gaining 0.68 percent to stand at 15,492.26 points in afternoon trading. The broad-based S&P 500 added 0.62 percent to 1,679.50, while the tech-rich Nasdaq Composite Index moved up 0.46 percent to 3,5018.08. -- \'Rough morning for the pound\' on prospect for more QE -- In London, Bank of England Governor Mervyn King again voted unsuccessfully for Britain\'s economy to be pumped with more fresh cash, minutes of the BoE\'s last monetary policy meeting revealed on Wednesday. King -- who steps down at the end of June -- was joined again by fellow MPC members David Miles and Paul Fisher in calling for an extra £25 billion in QE stimulus in order to boost economic growth, but for the fourth month in a row the other six members of the committee voted against them. Sterling took a hit amid the prospect of more QE, or cash stimulus, dropping to one month lows against the dollar and euro. \"It\'s been a rough morning for the pound, with economic data thwarting early attempts at a recovery,\" said Kathleen Brooks, research director at online trading firm Forex.com. \"BoE minutes, (British) retail sales and public sector data all weighed on the pound,\" she noted. Official data released Wednesday showed retail sales had slid unexpectedly by 1.3 percent last month amid cold spring weather. In foreign exchange activity, sterling slid to $1.5037 from $1.5154 late in New York on Tuesday. The euro traded at 85.54 pence, up from 85.16 pence. Elsewhere, the European single currency slid to $1.2864 from $1.2906 on Tuesday. The dollar initially slid against euro, but later recovered after in later Bernanke testimony \"refused to rule out the possibility of tapering asset purchases this year if the labour market were to improve,\" said Hewson. On the London Bullion Market, the price of gold rose to $1,408.50 an ounce from $1,360.75 late on Tuesday. And the Swiss franc slid to a two-year low at 1.2624 francs to the euro, following comments by the head of the Swiss central bank refusing to exclude setting negative interest rates to dull the attractiveness of Switzerland as a safe haven to park cash. Nearly two years ago the Swiss National Bank imposed a ceiling of 1.20 francs to the euro to prevent the value of the currency rising to heights that would severely damage the Alpine country\'s exports. The International Monetary Fund meanwhile on Wednesday urged the British government to adopt a \"clear\" plan to sell its stakes in state-rescued lenders Royal Bank of Scotland and Lloyds Banking Group, but warned that it might need to inject more capital. RBS shares rose 2.2 percent at 349.6 pence and LBG grew 2.3 percent to 62.96 pence . Asian stock markets closed mixed on Wednesday, with Tokyo closing at the highest level in five years thanks to a weak yen, and Sydney and Shanghai both lower following a strong performance by Wall Street overnight.