US Markets

U.S. stocks fell for the fourth of five sessions Thursday, after Federal Reserve Chairman Ben Bernanke deflated investors' stimulus hopes and a thawing of Washington's frozen debt negotiations failed to draw more bullish traders into the market. The Dow Jones Industrial Average closed down 54.49 points, or 0.44%, at 12437.12. It was a volatile session that saw the measure fall as much as 77 points in afternoon trading after rising as much as 90 points in the morning. The Standard & Poor's 500-stock index lost 8.85 points, or 0.67%, to 1308.87. The Nasdaq Composite fell 34.25 points, or 1.22%, to 2762.67. The major indexes declined in late-morning trading after Bernanke told lawmakers that the Fed isn't making any new bond-buying proposals, dashing hopes that arose Wednesday for more stimulus. The second round of what is known as quantitative easing concluded at the end of June.

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Stocks moved briefly into positive territory Thursday afternoon after the White House said it agreed with congressional leaders on $1.5 trillion in spending cuts. U.S. debt worries had jumped late Wednesday after Moody's Investors Service warned that the U.S. could lose its top triple-A bond rating given Washington's budgetary deadlock. The market had gained in early trading after J.P. Morgan Chase beat earnings estimates. The bank reported second-quarter earnings that topped forecasts amid an unexpected jump in revenue and lower credit-loss provisions.

J.P. Morgan led the blue-chip Dow's gainers, adding 1.8%. A rush of economic data before the open also helped buoy sentiment in early trading. New claims for unemployment benefits dropped by more than expected, though overall levels were still weak. Separately, the index of producer prices eased in June while U.S. retail sales increased, beating forecasts. Alcoa fell 2.5% and DuPont dropped 1.4% to lead the Dow's decliners. All S&P 500 sectors finished in the red. Industrial and technology stocks were weakest.

European Markets

European equity markets fell Thursday after the Italian government's borrowing costs surged in a bond auction, rekindling worries about the spread of the euro-zone debt crisis. The losses also came after Federal Reserve Chairman Ben Bernanke said now is not the time to launch a new round of stimulus measures. His comments overshadowed data showing that U.S. weekly jobless claims fell to the lowest level in three months.

The pan-European Stoxx 600 index slipped 0.8% to end at 267.68. Software AG was the biggest loser on the index. Its shares slumped more than 16% after the firm said late Wednesday that its fiscal second-quarter revenue has declined from the year earlier period due to the strong euro. Also in the sector, shares of business-software firm SAP AG dropped 2.8%. This weighed on the German DAX 30 index, which slipped 0.7% to 7,214.74. Italy was once again in the spotlight. The Italian government successfully sold nearly EUR5 billion of long-term bonds, but its borrowing costs rose sharply. Meanwhile, the Senate approved an austerity package, which will now go to the lower house of parliament for a vote, according to reports. Italy's FTSE MIB index slipped 1.1% to 18,640.35. Shares of insurer Assicurazioni Generali SpA fell 2.4% and those of Intesa Sanpaolo SpA fell 2.1%. The Italian auction reinforced sovereign-debt worries and weighed on financial stocks in Europe. Commerzbank AG slumped 4.4% in Frankfurt.

In London, shares of Thomas Cook Group PLC sank almost 16%, bringing its weekly losses to 43.6%. The travel company issued a profit warning earlier this week, citing a bigger than expected impact from unrest in the Middle East. Meanwhile, the U.K.'s FTSE 100 index slipped 1% to 5,846.95, with shares of Petrofac Ltd. down 3.8%. In Paris, telecom-equipment firm Alcatel-Lucent dropped 4.5% and was the biggest loser on the CAC 40 index, which declined 1.1% to 3,751.23.

Asian Markets

Asian stocks ended in mixed territory Thursday as Moody's Investors Service's review of U.S. credit ratings for a possible downgrade prompted caution, pressuring financial stocks and some exporters. Resource-sector stocks propped up mainland Chinese stocks as some commodities got a boost after U.S. Federal Reserve Chairman Ben Bernanke indicated the Fed may once again step in to support the economy.

Japan's Nikkei Stock Average ended the day 0.3% lower at 9,936.12 and Taiwan's Taiex slipped 0.1% to 8,481.35, surrendering early gains. After swinging in both directions, South Korea's Kospi ended little changed at 2,130.07, while Hong Kong's Hang Seng Index and China's Shanghai Composite Index rose 0.1% and 0.5%, respectively, to end at 21,940.20 and 2,810.44. In Tokyo, exporters were pressured as an increase in risk aversion pushed the dollar lower against the yen. Many financial stocks declined around the region in the wake of Moody's warning. Shares of Mizuho Financial Group Inc. shed 0.8%, and Sumitomo Mitsui Financial Group Inc. declined 2.3% in Tokyo.

Korea Life Insurance Co. dropped 1.2% in Seoul. Chinese financials in Hong Kong also came under selling pressure, with Bank of China Ltd. losing 1.1% and China Construction Bank Corp. dropping 0.8% in Hong Kong; in Shanghai, however, banks ended on a mixed note, with CCB rising 0.8%, while China Merchants Bank Co. shed 0.5%. Resource-sector stocks supported market gains in Shanghai and Hong Kong. Jiangxi Copper Co. jumped 2.8%, and gold miner Zijin Mining Group Co. soared 6.1%. In Hong Kong, the stocks rose 2.8% and 5.3%, respectively.

Base Metals

Base metals pared earlier gains to close mostly lower on the London Metal Exchange Thursday after U.S. Federal Reserve Chairman Ben Bernanke quashed speculation that the Fed will embark on another round of bond buying, driving the dollar higher against the euro. LME three-month copper was 0.3% lower on the day at $9,625 a metric ton, while lead fell the most, closing down 1.3% at $2,664/ton.

Nickel and tin, however, managed to remain in positive territory, ending the day up 1.0% and 0.5% respectively.

Crude oil futures prices fell a sharp 2.4% Thursday after Federal Reserve Chairman Ben Bernanke doused growing expectations for a near-term continuation of a U.S. economic stimulus program. Petroleum prices swung broadly for a second-straight day as Bernanke testified before congressional committees.

Traders bid oil futures higher early Thursday, in a carryover of gains from Wednesday's indication that the Fed would provide further stimulus to jump-start the sluggish U.S. economy, if needed. After a run toward $99 a barrel earlier, the news sent crude skidding to a low of $94.53 a barrel.

Light, sweet crude oil futures for August delivery on the New York Mercantile Exchange settled down $2.36, or 2.4%, at $95.69 a barrel. ICE Brent crude oil futures for August expired down 46 cents at $118.32 a barrel. For the second-straight month, the spread between Nymex crude and Brent widened to a record on the expiration day for Brent. The spread stood at $22.63 a barrel Thursday. September Brent crude settled down 1.3%, or $1.59, at $116.26 a barrel. Gold forged ahead to a new record as trader attention shifted to Europe's troubled bank sector.

The International Monetary Fund said Thursday that Europe's banks remain insufficiently funded and it is "critically important to put in place and immediately publicize credible plans" to deal with failing banks.

Gold for August delivery, the most actively traded contract on the Comex division of the New York Mercantile Exchange, settled at a record $1,589.30 a troy ounce, up $3.80, or 0.2%, but well below its intraday record of $1,594.90 a troy ounce, after Fed Chairman Ben Bernanke dashed traders' hopes of a third round of so-called quantitative easing.

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