US markets

U.S. stocks snapped a three day slide Wednesday as investors saw hope for further economic stimulus from the Federal Reserve. The Dow Jones Industrial Average saw a strong morning rally evaporate during the afternoon, but still finished with a gain of 44.73 points, or 0.36%, at 12491.61. The Standard & Poor's 500-stock index climbed 4.08 points, or 0.31%, to 1317.72, while the Nasdaq Composite added 15.01 points, or 0.54%, to 2796.92. Energy and materials stocks led the day's gains, helped by a fall in oil inventories. Caterpillar was the Dow's biggest winner, rising 1.6% while Disney and Merck each added about 1.1%.

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Investors had sent the Dow about 160 points higher on the day after Fed Chairman Ben Bernanke told legislators that the Fed was prepared to respond if stimulus was needed, signaling to some that he was keeping the door open for a third round of quantitative easing, or QE3. Those hopes had been bolstered by signs of slowing price inflation, after U.S. import prices fell last month for the first time in a year. Slowing inflation would give the Fed more leeway to maintain ultralow interest rates for the time being. Reports on consumer and producer prices due out this week are also expected to show a monthly decline in overall inflation and Wednesday, Bernanke warned about the potential of a deflationary threat. Enthusiasm had faded by the afternoon, with financials weakening considerably in the afternoon ahead of second-quarter earnings from J.P. Morgan Chase & Co., set for release Thursday.

European markets

European shares rose Wednesday, ending three days of heavy selling and finding a late boost after U.S. Federal Reserve Chairman Ben Bernanke said further monetary stimulus measures were possible if U.S. economic conditions deteriorate. The Stoxx Europe 600 Index gained 0.7% to close at 269.94. Bernanke, in prepared congressional testimony, said the Fed was contemplating some untested steps to further stimulate the economy if conditions deteriorate, although the central bank expects recent shocks holding down the economy to be temporary. European equities were trading near unchanged levels ahead of the testimony. Initial support was tied in part to data from China that showed second-quarter gross domestic product rose 9.5% from a year earlier, beating forecasts and helping allay fears that the economy may be headed for a hard landing. The figures helped boost stocks with the most exposure to the country, including miners and car makers, said Philip Isherwood, equity strategist at Evolution Securities. Shares in BMW AG rose 4.4%, Daimler AG gained 2.9% and Volkswagen AG rose 1.6%. The moves helped lift the German DAX 30 index 1.3% to 7,267.87. A downgrade of Ireland's sovereign debt rating to junk status by ratings firm Moody's Investors Service had little impact across Europe. Shares in Bank of Ireland and Allied Irish Banks PLC dropped 3% and 0.9% respectively. Other European banking stocks also finished lower, with BNP Paribas, which has some of the biggest exposure to the sovereign debt of Italy and peripheral European nations, down 0.9%. Ireland's ISEQ index rose 0.7% to 2,908.19. Other peripheral markets were more volatile, with Italy's FTSE MIB index rising 1.8% to 18,842.6, helped by a 4.1% gain for Intesa Sanpaolo as the bank continued to recover from big losses since the start of the month. The Greek ASE Composite, meanwhile, dropped 2.2% to 1,190.30. In London, miners were strong performers as commodity prices rose following the data from China and Bernanke's testimony. Shares in Antofagasta PLC rose 2.8% and Kazakhmys PLC climbed 4%. The FTSE 100 index added 0.6% to close at 5,906.43. In Paris, shares of L'Oreal SA dropped 3.4% after it said late Tuesday that second-quarter sales grew less than 1% due to weaker demand in North America and Eastern Europe. The French CAC 40 index rose 0.5% to 3,793.27, led by a 3.9% rise in shares of aerospace and defense firm EADS.

Asian markets

Asian stocks ended higher Wednesday as data showing robust economic growth and industrial production in China helped shift investor focus away from European debt troubles. Hong Kong's Hang Seng Index climbed 1.2% to finish the day at 21926.88, retracing some of the ground it had lost in the previous session, when it tumbled 3.1%. China's Shanghai Composite gained 1.5% to 2795.48. The data also helped some of China's key trading partners, with Japan's Nikkei Stock Average ending the day 0.4% higher at 9963.14, South Korea's Kospi up 0.9% at 2129.64 and Taiwan's Taiex cutting losses to end little changed at 8488.06. Singapore's Straits Times Index gained 0.4% to 3088.42. Many markets opened on a subdued note in the wake of a weak finish on Wall Street, after Moody's lowered Ireland's credit ratings to junk status. But Asian markets moved off lows after data showed China's gross domestic product for the second quarter was up a larger than expected 9.5% from a year earlier, and industrial production in June was up an expectation-trouncing 15.1% from a year earlier. Chinese property stocks gained following the release of the data, with China Overseas Land & Investment surging 5.7% and China Resources Land adding 3.2% in Hong Kong. On mainland bourses, China Vanke rose 1.3% in Shenzhen and Gemdale added 0.5% in Shanghai. The Chinese data also boosted shares of companies with business ties to China. Fanuc climbed 1.3% and Komatsu gained 0.8% in Tokyo. Some Japanese exporters were held back by the strong yen. Canon lost 0.7%. and Mazda Motor fell 0.9%. Agricultural Bank of China shares jumped 3.9% in Hong Kong after the lender said it expects to report a 45% jump in net profit for the first half of this year from a year earlier. The news also lifted other Chinese banks, with Industrial & Commercial Bank of China and China Construction Bank each adding 2.2%. In Shanghai, AgBank shares climbed 1.9%, while ICBC and CCB rose 1.2% and 1.5%, respectively.

Base metals

Base metals closed mostly higher on the London Metal Exchange Wednesday following a day of bumpy macro-driven trade that saw prices swing between positive and negative territory on the back of a mixed batch of global newsflow. LME three-month copper was unchanged from the previous day at $9,650 a metric ton, having eased from a five-day high of $9,749.75/ton hit in a knee-jerk rally following dovish comments by U.S. Federal Reserve Chairman Ben Bernanke. Nickel saw the steepest gains at the close of the session, trading at $23,975/ton, up 1.4% on the day. Crude-oil futures finished higher Wednesday on data showing a steep drop in U.S. oil inventories last week. Prices were also boosted by comments from Federal Reserve Chairman Ben Bernanke suggesting the U.S. central bank was open to restarting its controversial stimulus program. Light, sweet crude oil for August delivery settled up 62 cents, or 0.6%, to $98.05 a barrel on the New York Mercantile Exchange. Brent crude oil on the ICE Futures Europe exchange settled up $1.03, or 0.9%, to $118.78 a barrel. The federal Energy Information Administration said crude-oil stockpiles last week fell by a greater than expected 3.1 million barrels. Futures rose on the report, which was taken as a sign of improving oil demand in the world's largest crude-oil consumer. Noteworthy was the EIA's divergence from similar data compiled by industry group the American Petroleum Institute. Gold advanced to a record amid new signs that the Federal Reserve is open to another round of monetary stimulus and worsening debt woes in Europe. The most actively traded contract, for August delivery, gained $23.20, or 1.5%, to settle at $1,585.50 a troy ounce on the Comex division of the New York Mercantile Exchange. The contract set an intraday record of $1,588.90 a troy ounce. Gold for July delivery rose $23.30, or 1.5%, to settle at a record $1,585.20 a troy ounce. However, no contracts changed hands during floor trading hours.

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