LONDON |
LONDON - European shares edged higher but the euro eased on Wednesday as investors reacted cautiously to testimony from U.S. Federal Reserve Chairman Ben Bernanke that offered little guidance as to whether the central bank was moving closer to new stimulus.
In his testimony on Tuesday, Bernanke said the economic recovery was being held back by anxiety over Europe's debt crisis and the path of U.S. fiscal policy, and he expressed unease over a stagnant jobs market.
He said the central bank was considering a range of tools to help the economy but stuck to an earlier message that the Fed was waiting to see if they would be needed.
"The market will continue to trade in a tight range this summer unless something catastrophic happens and the Fed has to intervene," said Justin Haque, a pan-European trader at Hobart Capital Markets.
Equity markets have turned their attention to the corporate earningsoutlook after some forecast-beating results from major U.S. firms raised expectations the European reporting season could also surprise markets on the upside.
The pan-European FTSEurofirst 300 .FTEU3 index was up 0.3 percent to 1044.68 points in early trade, well within a 2.5 percent trading range of the past week.
The single currency gave up some initial gains after Bernanke's testimony to be around $1.2282, below Tuesday's one-week high of $1.2317, but off a two-year low of $1.2162 hit last week.
Bernanke completes his semi-annual Congressional testimony by addressing the House Financial Services Committee later on Wednesday.
European debt markets were focused on a German auction of up to 5 billion euros ($6.1 billion) of fresh two-year bonds as similar debt on the secondary market currently trades with a negative yield.
Good demand would mean investors are so worried about the European debt crisis they are prepared to pay a premium to the German government to park their cash in its two-year paper, even though it might have a negative yield.
(Reporting by Richard Hubbard; Editing by Anna Willard)
