By Wanfeng Zhou
NEW YORK | Thu Jun 7, 2012 8:06pm IST
(Reuters) – World stocks and the euro pared gains on Thursday after Federal Reserve Chairman Ben Bernanke said the U.S. central bank was ready to shield the economy if financial troubles mount but offered few hints that further monetary stimulus was imminent.
Bernanke told a committee of Congress the Fed was monitoring “significant risks” to the U.S. recovery from Europe’s debt and banking crisis closely.
Earlier, global stocks had rallied to their highest in more than a week and the euro advanced above $1.26 versus t he dollar after China surprisingly cut interest rates to shore up slackening economic growth, fuelling hopes other major central banks may follow suit.
MSCI world equity index rose 1 percent to 3 02.04 points, off an earlier high of 303.89.
Bernanke’s testimony comes after Janet Yellen, the Fed’s second-highest official, on Wednesday laid out the case for the U.S. central bank to provide more support to a fragile economy as financial turmoil in Europe mounts.
“We’re selling off because Bernanke didn’t reiterate the earlier comments from Janet Yellen, which really takes (a third round of quantitative easing) off the table in the immediate term,” said Adam Sarhan, chief executive of Sarhan Capital in New York.
U.S. stocks pared gains. The Dow Jones industrial average was up 93.05 points, or 0.75 percent, at 12,507.84. The Standard & Poor’s 500 Index was up 7.16 points, or 0.54 percent, at 1,322.29. The Nasdaq Composite Index was up 9.27 points, or 0.33 percent, at 2,853.99.
The euro last traded flat at $1.2574 after earlier rising as high as $1.2625.
U.S. Treasuries prices erased losses and edged higher after Bernanke’s comments. The benchmark 10-year U.S. Treasury note was up 1/32, with the yield at 1.6575 percent.