Markets

 

In late morning US trading, the Dow Jones industrials were up 0.78 per cent, at 12,310.93.

 

Broader stock indicators in the US were also higher. The Standard & Poor's 500 index was up 0.94 per cent, at 1,412.20, and the Nasdaq composite index was up 0.69 per cent, at 2,424.51.

 

But Britain's FTSE 100 index dropped 1.8 per cent to close at 6,171.50, while France's CAC 40 fell 1.3 per cent to 5,516.32 and Germany's DAX index slid 1.5 per cent to 6,715.44.

 

Indexes in Japan, South Korea, Singapore, Malaysia, India and Australia dropped by more than two per cent.

 

"...my view is that, taking all the new data into account... there is really no material change in our expectations for the US economy since I last reported to congress"

Ben Bernanke, Federal Reserve chairman

Japan
's Nikkei 225 stock index tumbled 2.85 per cent to 17,604.12, while Philippine stocks plunged 7.9 per cent, their worst drop since 1997.

 

Markets 'monitored'

 

Bernanke commented on the current state of the US market to a panel at the US house of representatives.

 

He said the Federal Reserve "has been closely monitoring the markets" and added that "they seem to be working well, normally".

 

Regarding the US economic outlook, Bernanke said: "My view is that, taking all the new data into account ... there is really no material change in our expectations for the US economy since I last reported to congress a couple of weeks ago."

 

Bernanke's analysis followed comments from Alan Greenspan, former chairman of the Federal Reserve, warning that a US recession could take hold later this year.

 

However, bonds fell as stocks tried to recoup some losses. The yield on the benchmark 10-year Treasury note rose to 4.57 per cent from its low for the year of 4.47 per cent late on Tuesday.

 

The dollar mixed against other major currencies, while gold prices fell.

 

The market took some solace from a Commerce Department report that the US economy grew at an annual rate of 2.2 per cent in the fourth quarter.