The European markets ended Wednesday's session in positive territory. The markets were weak in early trade, as investors were cautious ahead of Fed Chairman Ben Bernanke's testimony before the Joint Economic Committee of Congress. However, the markets turned positive after his testimony began. Investors are also watching for the release of the minutes from the most recent FOMC meeting later today.
Federal Reserve Chairman Ben Bernanke on Wednesday downplayed speculation that the central bank is planning to taper its $85 billion monthly bond buying program.
The economic recovery remains too fragile to proceed without extraordinary support from the Fed in light of fiscal restraint and headwinds from Europe, Bernanke said in semi-annual testimony before the Joint Economic Committee.
"A premature tightening of monetary policy could lead interest rates to rise temporarily but would also carry a substantial risk of slowing or ending the economic recovery and causing inflation to fall further," Bernanke told lawmakers.
He assured that policy makers are ready to scale back the QE3 program if presented with data showing sustainable improvement in the labor market. "The key to this program is the data," Bernanke said.
St. Louis Fed President James Bullard and New York Fed President William Dudley said Tuesday that there is no case yet for curtailing bond purchases, given low inflation and mixed signals for growth prospects.
Bank of England Chief Mervyn King maintained his call for more stimulus for the fourth month and was defeated again by a majority of six members as in previous months who cited faster-than-expected growth and pipeline impact from previous stimulus.
At his penultimate meeting, King along with Paul Fisher and David Miles sought an increase in quantitative easing by GBP 25 billion to a total of GBP 400 billion, the minutes showed Wednesday.
They said the case for additional stimulus was more compelling. "Further asset purchases now would facilitate an earlier normalization of the monetary stance when that became appropriate," the minutes showed.
But most members said the effects of the previous round of asset purchases were still coming through and, together with the extended Funding for Lending Scheme, should continue to boost activity.
The International Monetary Fund on Wednesday warned that fiscal consolidation in the U.K. will be a drag on economic growth. Given the weak growth prospects, it should adopt policies to re-balance the economy.
The economy is still a long way from "a strong and sustainable recovery," the IMF said in the concluding statement of its mission to the U.K.
U.K. manufacturers expect strong output growth in the coming three months, according to the latest Industrial Trends survey conducted by the Confederation of British Industry. Some 33 percent of firms predict increases in output and only 15 percent forecast falls, giving a balance of 18 percent. This was the third consecutive month of elevated output expectations.
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.40 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.20 percent.
The DAX of Germany climbed by 0.69 percent and the CAC 40 of France advanced by 0.37 percent. The FTSE 100 of the U.K. rose by 0.53 percent and the SMI of Switzerland gained 0.87 percent.
In Frankfurt, Daimler declined by 0.08 percent and BMW lost 0.58 percent. Volkswagen rose by 0.58 percent, after Macquarie upgraded the stock to ''Outperform'' from ''Neutral.''
Commerzbank and Deutsche Bank finished higher by 2.11 percent and 1.38 percent respectively. Nomura downgraded its rating on Commerzbank.
Morgan Stanley upgraded Metro to ''Overweight'' from ''Equalweight.'' The stock surged by 10.43 percent.
In Paris, Societe Generale rose by 0.41 percent. BNP Paribas and Credit Agricole added 1.24 percent and 1.61 percent respectively.
JPMorgan upgraded Lagardere to ''Neutral'' from ''Underweight.'' The stock gained 3.42 percent.
In London, Lloyds Banking climbed by 2.32 percent. The lender announced that it is still confident on capital position.
Kazakhmys dropped by 6.02 percent, after UBS downgraded the stock to "Neutral" from "Buy."
Carnival dipped by 0.61 percent, after HSBC downgraded the stock to "Neutral" from "Overweight."
Britvik surged by 10.65 percent, after stating that it sees full year earnings towards upper end of view.
Roche increased by 2.71 percent in Zurich. Citigroup upgraded its rating on the stock to "Buy" from "Neutral."
The euro area current account surplus surged to EUR 25.9 billion in March largely due to an increase in trade surplus, the European Central Bank reported Wednesday. The current account surplus amounted to EUR 14.6 billion in February.
Retail sales in the UK declined unexpectedly in April, the latest figures from the Office for National Statistics showed Wednesday.
Retail sales volume, including auto fuel, fell 1.3 percent month-on-month in April against forecast for a 0.1 percent increase. Sales, excluding fuel, dropped 1.4 percent compared with an expected 0.1 percent growth.
The U.K. budget gap, excluding interventions, totaled GBP 6.3 billion in April compared to a surplus of GBP 19.1 billion in the prior year, the Office for National Statistics showed Wednesday. However, the deficit was below the consensus forecast of GBP 8.5 billion.
Existing home sales in the U.S. saw a modest increase in the month of April, according to a report released by the National Association of Realtors on Wednesday. NAR said existing home sales climbed 0.6 percent to a seasonally adjusted annual rate of 4.97 million in April from an upwardly revised 4.94 million in March.
Economists had been expecting existing home sales to rise to an annual rate of 5.0 million from the 4.92 million originally reported for the previous month.
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Market Analysis
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.