The US Federal Reserve chairman, Ben Bernanke, delivered semi-annual testimony on the economy, saying that the outlook for the economy was ´´unusually uncertain.´´ He said that the Federal Reserve is ´´prepared to take further policy actions as needed´´ to return the economy to full growth. However the Fed has not decided on what form these steps may take.

US President Barack Obama has signed the new financial reform bill into law.

European shares posted firm gains on Wednesday. Banks rose on better-than-expected earnings from US bank Morgan Stanley. And mining stocks rose in response to higher metal prices. In London trade shares in BHP Billiton rose by 2.5pct and Rio Tinto was up 2.4pct. The FTSEurofirst index rose by 1.1pct with the UK FTSE up 1.5pct and German Dax gained 0.4pct.

US sharemarkets fell sharply immediately as Ben Bernanke started his testimony on the economy. But stocks received support from good earnings news. Shares in Morgan Stanley rose 6.3pct after posting better-than-expected earnings. The Dow Jones fell by 109 points or 1.1pct with the S&P 500 down 1.3pct, and the Nasdaq fell by 35 points or 1.6pct. After the bell eBay reported earnings of 40c a share, slightly above consensus.

US treasuries rose on Wednesday (yields lower) as investors trimmed positions in equities and commodities, drifting into bonds, after down-beat testimony from Ben Bernanke. US 2yr yields fell 3pts to 0.56pct and US 10yr yields fell 7pts to 2.88pct.

The US dollar rose against major currencies in the European and US sessions with most gains made as Ben Bernanke began his testimony. The Euro eased from around US$1.2910 to US$1.2735 before ending US trade at US$1.2755. The Aussie dollar fell from highs near 88.55c in European trade to US87.60c, before ending the US session near US87.80c. And the Japanese yen gravitated from 86.85 yen per US dollar to JPY87.35 before ending US trade near JPY87.05.

US crude oil prices fell for the first day in three as investor confidence fell in response to the testimony by the Federal Reserve chairman . The Nymex crude oil contract fell by US$1.02 or 1.3pct to US$76.56. And London Brent crude fell by US$1.05 to US$75.17 a barrel.

Base metal prices were firmer on the London Metal Exchange on Tuesday, with solid short-covering buying by fund managers. Metals rose by 1.4-3.3pct with copper doing best. But the Comex gold price was little-changed, up by US10c an ounce to US$1,191.80. Range was from US$1,183 to US$1,198.

Ahead: In Australia, the June quarter NAB business report is scheduled. Santos releases quarterly production figures. US Federal Reserve chairman Ben Bernanke delivers the second day of his testimony on the economy. Data on existing home sales and the leading index are released.