The US Federal Reserve chairman Ben Bernanke gave testimony to Congress on Wednesday. While Bernanke is encouraged by recent economic data, he notes that unemployment remains too high. Bernanke vowed to complete the second round of quantitative easing and was not concerned about the potential for higher inflation despite rising global commodity prices.

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European shares eased on Wednesday as investors chose to take profits across equity and commodity markets in response to Tuesday´s decision by China to lift interest rates. In corporate news, London Stock Exchange is to buy Canada´s TMX. The FTSEurofirst index fell by 0.4pct, with the UK FTSE lower by 0.6pct while the German Dax fell less than 0.1pct. In London trade, mining shares were lower with Xstrata down by 1.7pct, Rio Tinto easing 1.1pct and BHP Billiton was lower by 2.1pct.

US sharemarkets rallied in the last 30 minutes of trade with the Dow Jones posting its 8th day of gains. Shares of financial market exchanges were amongst the best performers on news that Deutsche Boerse is in advanced talks to merge with NYSE Euronext. At the close, the Dow Jones index was up almost 7pts or 0.1pct but the S&P 500 fell 0.3pct and the Nasdaq was lower by 8pts or 0.3pct.

US treasuries rose on Wednesday (yields lower). Investors chose to shift funds from equities to bonds after Ben Bernanke indicated little concern about inflation and a determination to continue with quantitative easing. There was also good demand for an auction of 10yr notes. US 2yr yields fell by 6pts to 0.805pct and US 10yr yields fell by 9pts to 3.66pct.

Major currencies were mixed against the greenback during European and US trade. The Euro rose from near US$1.3610 to US$1.3740 and was holding near US$1.3730 in late US trade. The Aussie dollar traded between US100.85c and US101.45c, and was near US101.15c in late US trade. And the Japanese yen lifted from 82.65 yen per US dollar to around JPY82.20, and was near JPY82.40 in late US trade.

US and European crude oil prices diverged on Wednesday. US oil prices softened in response to high stock levels. The Energy Information Administration reported that gasoline stocks rose in the latest week to the highest level in almost 21 years. But Brent crude rose on concern about simmering unrest in Egypt. The Nymex crude oil contract fell by US23c to US$86.71 a barrel. But London Brent crude rose by US$1.90 to US$101.82 a barrel.
Base metal prices eased on the London Metal Exchange on Wednesday as investors chose to take profits. Metals fell up to 2.7pct with nickel doing best, falling only slightly. But the Comex gold futures price rose US$1.40 an ounce to US$1,365.50 on simmering inflation concerns.

Ahead: In Australia, labour market figures for January are released. Telstra and Rio Tinto are amongst those releasing half-year results. In the US, weekly jobless claims data and wholesale trade figures are released.
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