Markets rally on Fed reassurances

NEW YORK, Aug. 27 (UPI) -- U.S. investors found renewed confidence Friday after the Federal Reserve chairman said there were options left to reignite the stalled economic recovery.

In a speech in Wyoming Friday morning, Fed Chairman Ben Bernanke said, among other measures, central bank policy makers remained open to buying Treasury bonds and mortgage-backed securities, which would keep interest rates low and maintain liquidity in financial markets.

The speech ignited a rally on Wall Street despite a Commerce Department report on the gross domestic product, which fell below expectations in the second quarter.

The department said U.S. economic output in the second quarter rose 1.6 percent, a sharp drop from the advance estimate of 2.4 percent growth and a downturn from first-quarter growth of 3.7 percent.

The new figures are based on the most complete information available. Friday's estimate is the second of three estimates the government produces.

By close, of trading in New York, the Dow Jones industrial average had added 164.84 points, 1.65 percent, to 10,150.65. The Standard & Poor's 500 index added 1.66 percent, 17.37, to 1,064.59. The Nasdaq composite index of tech-dominated stock rose 1.65 percent, 34.94, to 2,153.63.

On the New York Stock Exchange, 2,608 stocks advanced and 392 declined on a volume of 4.8 billion shares traded.

The benchmark 10-year Treasury note fell 1 14/32 to yield 2.643 percent.

The euro rose to $1.2733 from Thursday's $1.2729. Against the yen, the dollar rose to 85.23 yen from Thursday's 84.41 yen.

In Japan, the Nikkei 225 index added 0.95 percent, 84.58, to 8,991.06.

In Britain, the FTSE 100 index gained 0.89 percent, 45.72, to 5,201.56.

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