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GLOBAL MARKETS-Stocks rise in volatile session, Intel warns

Published 08/27/2010, 12:14 PM
Updated 08/27/2010, 12:20 PM
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* Global shares gyrate on Bernanke and Intel statements

* Bernanke voices concerns for economy, ready to act

* Intel warns on Q3 revenue, shortfall of $1 bln possible

* Euro rises but yen drops on intervention concerns

By Daniel Bases

NEW YORK, Aug 27 (Reuters) - Global stocks rose on Friday after U.S. economic growth data topped estimates, even as Federal Reserve Chairman Ben Bernanke said the central bank was ready to counter a softening recovery and tech powerhouse Intel warned on its revenues.

Bernanke said the central bank would consider further steps to spur the stumbling economy by providing additional stimulus, even by unconventional measures. For details, see [ID:nN26216124]

Bernanke's comments and Intel's warning triggered a sharp sell-off in global shares, and investors piled into the U.S. dollar for safety, causing oil and gold prices to drop.

The losses proved short-lived, and markets recovered as investors studied Bernanke's comments at the annual Jackson Hole, Wyoming symposium of central bankers.

"(Bernanke) is not saying anything to change the big picture, and the big picture here is of a continued drip of grim economic tidings, and the takeaway here is that unemployment is problem number one," said David Dietze, chief investment strategist at Point View Financial Services in Summit, New Jersey.

"Although we got a better-than-expected number for GDP, the tally we are left with for the second quarter is just not strong enough to make a dent in the unemployment figure," he said.

The second-quarter U.S. gross domestic product data was revised lower but investors cheered that it was not as low as expected. that gave U.S. and European stocks a boost. [ID:nN26193565]

In mid-day trade, the Dow Jones industrial average <.DJI> rose 115.64 points, or 1.16 percent, to 10,101.45. The Standard & Poor's 500 Index <.SPX> gained 11.26 points, or 1.08 percent, to 1,058.48. The Nasdaq Composite Index <.IXIC> climbed 19.84 points, or 0.94 percent, to 2,138.53.

Intel Corp , a Dow component, said third-quarter revenue would be below its previous outlook, perhaps by as much as $1 billion due to weaker demand for personal computers. The stock fell after the forecast, but later traded up 1.2 percent at $18.40. [ID:nN27260125]

Heading into the close of the week, Europe's top shares held modest gains. The FTSEurofirst 300 index <.FTEU3> was up 0.6 percent.

The MSCI All-Country World equity index <.MIWD00000PUS> rose nearly 1 percent, off a seven-week low hit earlier this week. The index is down 3.5 percent so far in August. The Thomson Reuters global stock index <.TRXFLDGLPU> gained nearly 1 percent. Emerging stocks <.MSCIEF> edged up 0.3 percent.

CURRENCIES AND DEBT

The euro recovered against the U.S. dollar after Bernanke's comments and Intel's report.

After slipping as low as $1.2676 according to Reuters data in the initial reaction, the euro traded at $1.2778, up 0.46 percent.

The dollar, however, remained up against the yen, gaining 0.5 percent at 84.85 .

The yen is under pressure as speculation persisted that Tokyo might take steps to stem export-damaging strength in the Japanese currency. The yen is hovering near a 15-year peak of 83.60 against the greenback on safe-haven trade that is choking off its already slumbering economy.

Prime Minister Naoto Kan said he would take firm action on currencies when needed and that he would meet Bank of Japan Governor Masaaki Shirakawa when the central bank chief returns from the Jackson Hole conference. [ID:nTKZ006504]

"I don't think we'll see intervention around current levels unless we get a disorderly move where dollar/yen falls sharply, say by 3 yen, during one day," said Gavin Friend, currency strategist at nabCapital.

U.S. Treasuries prices fell on profit-taking from recent rallies after Bernanke's speech signaled no imminent bond buying by the central bank.

The benchmark 10-year Treasury fell 1-4/32 points in price, driving the yield up to 2.61 percent.

German Bund futures fell 30 ticks to 133.64, with traders saying the market was disappointed that Bernanke didn't announce any new stimulus measures.

Crude oil rose 1.2 percent to $74.27 per barrel, and spot gold prices gained $7.10 to $1241.10. (Reporting by Daniel Bases; additional reporting by Lucia Mutikani, Burton Frierson, Vivianne Rodrigues, Ryan Vlastelica, Franklin Paul, Natsuko Waki, Atul Prakash, Ian Chua; editing by Jeffrey Benkoe)

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