US Federal Reserve Chairman Ben Bernanke's reassuring
comments on the state of the US economy helped support US stocks, but a report
by Fitch Ratings that the UK faced a "formidable" fiscal challenge
pushed European stocks to near two-week closing lows.
Risk-averse investors streamed into gold, sending prices for
the precious metal to a record dollar high amid fears that euro zone credit
contagion could stunt global economic growth.
Bernanke said the US economy seemed to have enough momentum
to avoid a "double-dip" recession, while European leaders were
committed to ensuring the survival of the euro and had enough money to meet
obligations of heavily indebted member nations.
Still, traders remained anxious about debt levels in several
euro zone countries, as Portugal, Italy and Spain prepared to sell new bonds
this week. It will be the first sale by Spain since a credit ratings downgrade.
"Markets remain under pressure," said Peter Dixon,
an economist at Commerzbank. "Until we see any indications that
uncertainty has lifted, the prospects of any decent rally in the European
markets appears distant."
The pan-European FTSEurofirst 300 index of top shares
provisionally closed down 1 percent, falling for the third consecutive session,
but the MSCI's all-country world stock index gained 0.2 percent with support
from US stocks.
The Dow Jones Industrial Average was up 67.42 points, or
0.69 percent, at 9,883.91. The Standard & Poor's 500 Index was up 4.96
points, or 0.47 percent, at 1,055.43. The Nasdaq Composite Index was down 11.11
points, or 0.51 percent, at 2,162.79.
The euro rose above $1.20 against the dollar a day after
hitting its lowest level since March 2006, and pared losses against the Swiss
franc as traders cited possible intervention by the Swiss National Bank.
The euro was last up 0.44 percent at $1.1966.
The pound fell after Fitch urged Britain to cut its deficit,
the latest in a series of concerns expressed by rating agencies about the state
of government finances in Europe, encompassing Greece, Spain, Hungary, and
Ireland.
Solving debt problems implies heavy budget cuts at a time
when many believe spending is needed to help keep economic recovery on track.
Spot gold prices rose above $1,250 an ounce, a record high,
benefiting from fears the European sovereign debt crisis may spread, weighing
on a global recovery.
"It is mainly the fear of another slide into recession
which is seeing demand for gold as a safe haven," said Commerzbank analyst
Daniel Briesemann.
